El Salvador’s bitcoin movement highlights best and worst crypto impulses: Morning Brief

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Wednesday, September 8, 2021

One country’s adoption of bitcoin highlights 2 competing crypto visions

Tuesday marked what one observer called the start of a new world, as El Salvador officially became the first country to accept bitcoin as legal tender.

This much-anticipated move is a big test of the cryptocurrency’s sustainability and foreshadows what might await other countries, namely Panama, as more economies adapt to the suddenly burning global movement of cryptocurrencies.

I believe this is a watershed moment in the evolution of digital currency and that it ushers in the start of a new world, as we can expect more nations, especially those that have developing economies, are following the historic example of El Salvador, said Nigel Green, founder and CEO of deVere Group, a financial advisory firm.

The Greens’ words echoed those of Cathie Wood, an irrepressible bull who runs Ark Invest. It is exposed to the crypto market through leveraged stocks like Coinbase (COIN) and Square (SQ) in its various innovation-focused exchange-traded funds (ETFs).

In an interview with Yahoo Finance Live last week, Wood said crypto will usher in a new global monetary system. It is a rules-based monetary policy, which is completely decentralized and is therefore not subject to the whims of policymakers. “

She added that crypto is a hedge against the whims of policymakers, especially in emerging markets.

Despite El Salvador’s move and Woods’ bullish approval, the crypto could not surpass its reputation as a highly volatile asset. The duality is best summed up by what one Salvadoran entrepreneur told the Wall Street Journal: My mom thinks bitcoin is a thing of the devil, but bitcoin has a lot of benefits. “

The story continues

Indeed. Quicker than you might Chivo tell, bitcoin revealed its evil side, falling below $ 50,000 and vanishing by over 17% during the day as some long positions were liquidated en masse. El Salvador’s e-wallet also suffered issues on day one that temporarily disabled the technology.

The massive selloff also weighed on new entrants like Solana (SOL1-USD) and Cardano (ADA-USD). The two are quickly becoming two of the hottest tickets in crypto investing, as Yahoo Finance David Hollerith pointed out earlier this week, but Cardano recorded a double-digit drop in whipsaw trading on Tuesday. .

In fact, Woods’ comment exposed the central paradox at the heart of Tuesday’s active day in the crypto markets. If you are an investor embracing digital currency because of its decentralized appeal, is it really constructive to have a central government (especially one with El Salvador’s checkered past) as a major player in the market?

The inexplicable Bitcoin reversal also highlighted something that Barry Bannister, chief equity strategist at Stifels, highlighted on Tuesday. Speaking to Yahoo Finance, he called the digital currency a speculative asset light years away from a safe haven like gold (GC = F), the US dollar or the Japanese yen (JPY).

Bitcoin is an asset that moves with global liquidity and increases and decreases with the growth of the global money supply, which has been declining since March, Bannister explained. He listed reasons such as a Federal Reserve that may start to gradually reduce stimulus measures, a tightening of China’s monetary policy and an increase in COVID-19 infections that will fuel leakage offers to security for shelters.

When all of this happens, bitcoin, as a specific asset, will simply dive to $ 15,000, he said. I think he’s gonna be a really bad performer by the end of the year.

By Javier E. David, Editor-in-Chief at Yahoo Finance. Follow him on @Teflongeek

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What to watch today

Economy

7 a.m. ET: MBA mortgage applications, week ended September 3 (-2.4% in the previous week)

10:00 a.m.ET: JOLTS Job Openings, July (10.049 million expected, 10.073 million in June)

2:00 p.m. ET: Federal Reserve Beige Book

3:00 p.m. ET Consumer Credit, July ($ 25 trillion in July, $ 37.690 billion in June)

Earnings

Post market

GameStop (GME) Expected to Report Adjusted Loss of 67 cents on $ 1.123 billion in revenue

Lululemon (LULU) to report adjusted earnings of $ 1.19 per share on revenue of $ 1.334 billion

HR (HR) is expected to report adjusted earnings of $ 6.49 per share on revenue of $ 974.8 million

Politics

President Biden, alongside U.S. Secretary of Labor Martin Walsh, will deliver a speech in honor of unions at the White House at 11:20 a.m. ET today. The president is also expected to receive a briefing from his COVID-19 response team ahead of what will be billed as an address to the nation on the pandemic tomorrow.

Congress remains on vacation, but House Speaker Nancy Pelosi could make the headlines today with her weekly press conference at 9.45am ET in Washington. She will then travel to Massachusetts to receive an honorary degree from Smith College in the evening.

Top news

European markets collapse after gloomy session on Wall Street and Asia [Yahoo Finance UK]

Bitcoin Crashes After El Salvador’s Difficult Deployment [Yahoo Finance UK]

Coinbase Receives SEC Notice on Loan Product [Bloomberg]

PayPal buys Japanese unicorn Payy for $ 2.7 billion [Bloomberg]

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