El Salvador became the first country to legalize bitcoin on September 7, this year, making it the first country to do so.
While the move advanced the narrative of Bitcoin and the larger crypto market in terms of mass adoption, it also sparked a wave of speculation in El Salvador from both the opposition and citizens.
Thousands of Salvadorans took to the streets in the nation's capital on October 18 to protest the leadership's economic policies, including the decision to make BTC legal tender in the country. Protesters chanted slogans such as "Bitcoin is a fraud" and "No to dictatorship," while Bukele appeared to downplay the outpouring of dissent. But what would happen to Bitcoin if these ideologies clashed?
Macro-event triggered cycle
The year 2021 was a year of extreme highs and lows caused by global macro-events and FUDs that fueled the momentum of space, primarily BTC. Clearly, Bitcoin's price had been heavily influenced by social sentiment throughout the year.
Notably, when El Salvador's Legislative Assembly passed the Bitcoin Law on June 8, BTC's price increased by nearly 25% in the following three to four days. The El-Salvador hype, on the other hand, had little effect on the price, with BTC falling below $30K in the following two weeks.
Similarly, Bitcoin's price plummeted after it was designated as legal tender in El Salvador on September 7. Its price dropped by nearly 18 percent, as did the broader market, as a result of a flash crash.
So, while the El Salvador hype pushed the narrative in terms of mass adoption, it did not have the expected effect on BTC's price. Nonetheless, at the time of writing, anticipation of a new BTC price ATH was high, as was the hope of a BTC ETF; will these protests have an impact on BTC's global status? That is why it is critical to examine the El Salvador BTC fiasco and what it entails.
Contrasting facts
Bukele hoped that the adoption of BTC in El Salvador would help the country retain the more than $400 million in financial fees lost when Salvadorans send remittances home from abroad. Such payments account for approximately 22 percent of the country's gross domestic product (GDP).
Bukele also stated last month that the Chivo Wallet was being used by 2.1 million Salvadorans. In fact, it had more users in less than three weeks than any other bank in El Salvador. These statistics, however, seemed dubious given that only about a third of Salvadorans use the internet and that a large proportion of the population lives below the poverty line.
Furthermore, a survey found that more than 65 percent of Salvadorans strongly oppose the use of bitcoin as legal tender. However, the survey presented a skewed opinion because it only had a target audience of 1,281 people, which was a small group in comparison to El Salvador's population of around 6.49 million.
More concrete data, on the other hand, revealed that El Salvador preferred Bitcoin over the US dollar, as highlighted in this article.
Nonetheless, with protests against Nayib Bukele intensifying, could it be that El Salvador has become a global Bitcoin laboratory where BTC tests have failed? Even though a clearer picture will emerge with time, if the first country to legalize Bitcoin deviates from the narrative within the first few months, it could harm BTC's price and image during this uncertain period of ETF approval and further impede BTC's ascension.
Bitcoin was trading at $60,796 at the time of writing, down 0.55 percent from its previous day's high. A drop below the $60K level, on the other hand, can be concerning for the coin's trajectory in the near future.
