Bitcoin touches $52,000 ahead of El Salvador legal tender date
08:49, 6 September 2021
Bitcoin has gone close to USD52,000 in anticipation of El Salvador becoming the first country to accept the cryptocurrency as legal tender.
Bitcoin hit USD51,744 at end of the US day on Sunday with further rises possible on a coordinated reddit campaign which is encouraging investors to buy a token USD30 worth of the coin to mark the historic moment.
El Salvador will make bitcoin legal tender at 3pm local time Tuesday, with redditors on one thread suggesting investors make a coordinated purchase at 2pm.
"Not a pump"
“I have meant this as more of a support gesture, rather than a pump. It's the first that a nation has adopted Bitcoin. This is an important time in Bitcoin,” said one poster suggesting the move.
A price rise linked to El Salvador's unique approach to the cryptocurrency would not be unhearaled. The token’s price rose 7% in the 24-hour period after the El Salvadoran parliament approved President Nayib Bukele’s proposal to make the digital currency legal tender in early June.
According to Bloomberg El Salvador has set-up bitcoin ATMs so its citizens can convert the digital currency into US dollars, as well as creating a USD150m fund to back this process.
Bitcoin will smooth remittance process
The Central Intelligence Agency's Factbook indicates El Salvador has a nominal gross domestic product per capita of just USD4108 with nearly USD25bn worth of remittances sent to the Central American country in 2020, according to World Bank data.
The adoption of bitcoin as legal tender is expected to make such transfers easier.
Bitcoin will be held in digital wallets which means a bank account is not required - another positive for a country where large sections of the population are unbanked.
IMF sceptical
However, not everyone is convinced. In a 26 June blog post titled, Cryptoassets as National Currency? A Step Too Far, the International Monetary Fund (IMF) warned that using bitcoin as legal tender could drive price instability and reduce the effectiveness of monetary policy.
Read more: El Salvador accepts bitcoin as legal tender
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