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Bitcoin’s $ 6,500 rebound hits El Salvador’s “historic turning point” in fiat currency

Cryptocurrency

Bitcoin quotes and financial markets

Cryptocurrency (virtual currency) market on the 10th. Bitcoin prices soared to 4.06 million yen ($ 37,000), up + 12.5% ​​from the previous day.

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Pessimism has risen due to rising selling pressure, and when it rebounded at the low of $ 31,000 on the 23rd and formed a double bottom, it was temporarily bought at $ 6,500 (about 70) in the form of a big purchase during the recent downward trend in New York time. It played a big rebound (10,000 yen width). Although it is still in the range of 1 BTC = 30,000 to $ 42,000, it can be said that the emergency has surpassed for the time being.

Bloomberg Intelligence strategist Mike McGrone pointed out that there was excessive bearish sentiment around $ 30,000 at the time of the plunge, showing indicators that had fallen to the Corona shock level in March 2008. “The tide may have changed,” he said.

Cryptocurrency-related company Delphi Digital also pointed out bullish divergence based on the daily RSI. It suggests a weakening of the downtrend.

Reaching a historic turning point

On June 9, 2009, the cryptocurrency industry faced an unprecedented situation in which the Republic of El Salvador, located in Central and South America, “passed a bill that makes Bitcoin the national legal tender.” The bill is expected to be enacted in 90 days.

Along with this, President Nayib Bukele has indicated his intention to use geothermal power generation (renewable energy) using active volcanoes for volcano mining of bitcoins, and has instructed state-owned electric power companies.

The bill to convert Bitcoin into legal tender was announced at the Bitcoin international conference “Bitcoin 2021” held in Miami, USA from the 4th to the 5th of the US time. Refers to the currency recognized by law.

Relation:[Full text]Bitcoin legal tender review, reading the speech of President El Salvador in Japanese

Developing countries like El Salvador have been plagued by political instability and economic hardship for many years, and about 70% of the population in El Salvador does not have a “bank account.” In addition, while most of GDP (gross domestic product) is dominated by remittances of overseas workers, there is also demand for “Lightning Network”, a layer 2 scaling solution for Bitcoin that solves the cost aspect of the international remittance problem. It is said to be extremely expensive.

The impact on other countries has already begun to appear, and Latin American countries suffering from economic difficulties inspired by El Salvador and inflation of their own currencies are showing signs of suggesting the introduction of Bitcoin from the perspective of international remittances and financial inclusion. A big ripple is spreading outside.

Relation:El Salvador-inspired Latin American countries, politicians suggest Bitcoin support one after another

In connection with the news of El Salvador, Yuzo Kano (@YuzoKano), the founder of bitFlyer, a major domestic cryptocurrency exchange, said, “The economic impact is limited due to the size of the country, but the country has accepted it as legal tender. It has an extremely large meaning in the sense of “giving confidence to Bitcoin.” “It is expected that the volatility will decrease (= the stability of the currency will increase) by expanding the overall pie.” ..

“There is a debate about whether it is necessary to develop trade by connecting the worlds of Fiat and Crypto, and to hold Bitcoin as an alternative asset in the inflationary phase of large-scale monetary easing, or as a national” reserve “. It is possible that other countries, which are promoted and whose financial infrastructure is vulnerable, will follow suit, and institutional investors will follow suit. “

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On the other hand, it has been pointed out that there is a concern that “if there is a possibility that it falls under the foreign currency of the Foreign Exchange Law, it may cause great confusion in the crypto asset (virtual currency) industry including businesses and users”, and regulations There is also new debate about aspects and legal issues.

Hash rate temporarily plummeted

A short-term concern is probably the Chinese government’s regulatory trends on Bitcoin miners.

China’s major mining pools AntPool, F2Pool, Polin, BTC.com, etc. confirmed a significant drop in hash rate (mining speed) on the 9th.

Source: BTC.com

Details:BTC hash rate plunge of major mining pool, two regions in China announce business ban

In China, on May 18, the China Banking Association and others reissued a notice banning cryptocurrency-related operations to financial institutions, and the Finance Commission of the State Council of the People’s Republic of China issued a bitcoin mining and trading activity. The crackdown was launched.

While there is a risk that Chinese businesses, including major miners, will be forced to shrink or withdraw from their businesses and dispose of their Bitcoins, if hash rates are decentralized and internationalized, China risk will be reduced. Some people think that it is positive in the medium to long term because it will also be connected.

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Author: S.Ninomiya

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“Cryptocurrency” means “cryptographic assets”

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