Cryptocurrency roundup: Bitcoin sells off even as it becomes legal tender

In a week when El Salvador made bitcoin legal tender, cryptocurrency values fell hard – with one exception. Saloni Sardana looks at the stories that caught our eye.

The cryptocurrency news was dominated this week by El Salvador’s adoption of bitcoin as legal tender. However, the rollout did not go smoothly and most cryptocurrencies were enveloped in a sea of red. Bitcoin fell by as much as 17%, and ether lost 23%, while obscure altcoin Solano was one of the few that managed gains.

These are the top stories that caught our eye.

Bitcoin becomes legal tender in El Salvador in messy roll out

El Salvador has become the first country in the world to adopt bitcoin as legal tender. The government has started building bitcoin ATMs and has created a $150m fund to help facilitate exchange between bitcoin and the US dollar. It also bought 400 bitcoins, worth roughly $20m, and said it intended to purchase much more.

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The move was made in the hope it would increase the amount of remittances sent home. El Salvador is highly dependent on money sent by citizens who live and work abroad, hitting almost $6bn in 2019 and accounting for 16% of GDP.

Some argue that it will be cheaper to send money in bitcoin. But critics fear that it comes at a time where Salvadorans don’t know enough about how cryptocurrencies work and it may accelerate financial crime in a country notorious for corruption.

A poll conducted by the Central American University (UCA) found that only 4.8% of respondents understood bitcoin. And three out of four Salvadorans were still sceptical about its adoption in July, according to Reuters.

Solana hits the Moon

Cryptocurrency Solana, which is being touted as a challenger to ether, hit an all-time high of around $216 this week. The little known cryptocurrency has risen almost 400% in one month alone. Solana is a blockchain network tied to cryptocurrency token SOL, in the same way that Ethereum hosts the ether token.

Solana’s spectacular gains follow the network’s foray into decentralised finance and non-fungible tokens (NFTs), particularly through the launch of the “Degenerate Ape Academy”, an NFT that was built on Solana’s network last month.

SOL has been on a winning streak in recent weeks and now boasts a total market valuation of more than $53bn. It has risen so rapidly that last week it overtook Ripple and popular “joke” cryptocurrency dogecoin to become the sixth largest cryptocurrency by market capitalisation, according to Coinbase.

Like Ethereum, Solana has made “smart contracts” a core focus. These are simply programs that run on the blockchain when predetermined conditions are met, without the help of any financial intermediaries, effectively cutting out the middleman.

Solana is considered to be both cheaper and faster than Ethereum, capable of up to 50,000 transactions per second, compared with Ethereum’s 20,000-30,000 transactions per second.

Ukraine is the latest country to formally legalise cryptocurrencies

Ukraine adopted a new law that paves the way for cryptocurrencies to be regulated and legalised this week. The country’s parliament gave the bill the green light in an almost unanimous vote on Wednesday. The next step would be for the country’s president Volodymyr Zelensky to sign the bill.

The draft bill said: “This Law regulates legal relations arising in connection with the turnover of virtual assets in Ukraine, defines the rights and obligations of participants in the virtual assets market, the principles of state policy in the field of virtual assets.”

Bitcoin could hit $100,000 by early 2022 and ether could hit $35,000, says Standard Chartered

Who said cryptocurrencies were going to fizzle out? UK banking giant Standard Chartered definitely doesn’t think so.

A new cryptocurrency research team at the bank is predicting that bitcoin could double in value and reach as high as $100,000 by early 2022. Over the longer term the bank is betting the value of the crypto will be around $175,000.

The bank is also very bullish on ether, predicting that the world’s second most popular cryptocurrency will trade in a range of $26,000-$35,000.

But in order for those predictions to be realised, bitcoin would have to hit its higher target of $175,000.

And what is more is that the bank expects bitcoin “will become the dominant peer-to-peer payment method for the global unbanked in a future cashless world”.

Bitcoin is now for the sale via the Post Office

From as early as next week, cryptocurrencies can be purchased using the Post Office’s EasyID verification app.

The Post Office’s mobile app will connect users to Swarm Markets, a decentralised cryptocurrency exchange platform, where customers can buy vouchers which can be redeemed to purchase cryptocurrencies including ether and bitcoin.

The Post Office said it will not earn any commission on the vouchers but will receive a fee from Swarm Markets in return for users using the EasyID verification app.

Cryptocurrency markets update

Here’s what happened in the crypto market in the last seven days:

  • Bitcoin fell 7% to $46,145.
  • Ether fell 11% to $3,390.
  • Dogecoin fell 16% to $0.25.
  • Cardano fell 17% to $2.46.
  • Solana rose 42% to $182.

What you need to watch out for

Cardano’s “Alonzo” upgrade, which is due to take place on 12 September. The Alonzo hard fork will pave the way for much-anticipated adoption of smart contract functionality.

Saloni Sardana

Saloni is a web writer for MoneyWeek focusing on personal finance and global financial markets. Her work has appeared in FTAdviser (part of the Financial Times),  Business Insider and City A.M, among other publications. She holds a masters in international journalism from City, University of London.

Follow her on Twitter at @sardana_saloni