Bitcoin’s (BTC-USD) downward trajectory continued on Wednesday morning with its price tumbling 13.4% as El Salvador’s decision to accept the crypto as legal tender hit some roadblocks.
The world's biggest cryptocurrency was trading at $45,189, down from more than $50,000 just a day earlier.
Some of El Salvador's citizens protested the move, amid fears that bitcoin’s volatility puts everyday investors at risk and because the poor may not be able to access the technology. There are also concerns about criminal activity and illicit transactions.
More than 1,000 people held a protest against the country's adoption of bitcoin on Tuesday.
"There is concern that by becoming known as a bitcoin haven, the country could attract the wrong kind of investment from criminal groups seeking anonymity," said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
The rollout also faced tech issues. Initially, the government-backed digital wallet called Chivo was not available on platforms like Apple (AAPL) and Huawei.
Later, the app could not deal with the high number of user registrations and the government had to take it offline and increase capacity.
When the price dipped on Tuesday, Salvadoran president Nayib Bukele tweeted that the country was "buying the dip" and had purchased 150 bitcoins, bringing the total number of bitcoins held by the country to 550.
— Nayib Bukele 🇸🇻 (@nayibbukele) September 7, 2021
"Rather than having a positive impact on markets, investors were on a selling spree, despite bitcoin reaching its highest price since May, surpassing $52,000,” said Naeem Aslam, chief market analyst at Ava Trade.
It didn’t help that major exchanges reported operational issues, causing transactions to be delayed "in the midst of the market meltdown."
To mark El Savador's bold move, Twitter and Reddit users had pledged to buy $30 worth of BTC on 7 September, dubbed "bitcoin day." MicroStrategy's CEO was part of the growing movement.
Some Reddit users even suggested that if all 3,316,862 community members were to buy $30 of bitcoin each on Thursday, $99,505,860 would be added to the cryptocurrency.
Streeter said "a pump and dump scenario is partly playing out after there were calls on social media forums for fans to buy tranches of bitcoin to celebrate the bitcoin law in El Salvador. Some speculators cashing in on the previous sharp gain may have sparked further falls."
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