Key Takeaways:
- El Salvador’s assembly passed a legislation to create a $150 million Bitcoin trust.
- However, citizens continue their protest against Bitcoin.
- Meanwhile, Bitcoin continues to move horizontally after failing to breach $50,000 again.
NEW DELHI (CoinChapter.com) — El Salvador’s Legislative Assembly passed legislation creating a $150 million Bitcoin trust to support crypto infrastructure and services development. However, the country is in turmoil, with protests against President Nayib Bukele’s decision to make Bitcoin legal tender.
El Salvadorans took to the streets on Friday to protest the adoption of Bitcoin. Moreover, the IMF and other international organizations criticized the move as well. Protestors voiced concerns about the use of cryptocurrency, especially to pay for pensions and welfare.
Meanwhile, Bitcoin failed to close above $50,000 after August 23. The cryptocurrency is moving horizontally above its support.
El Salvador’s Bitcoin Troubles
The legislation comes just one week before the country’s controversial Bitcoin law comes into effect on September 7. The bill passed with 64 in favor and 14 against the motion. The Trust would help facilitate the conversion of BTC to USD, with $23.3 million of the fund earmarked to support installations of crypto ATMs.
Also, another $30 million from the fund would help incentivize the adoption of the Government’s digital wallet, Chivo. In June, President Bukele announced an airdrop of $30 in Bitcoins for every citizen. However, with a population of 6.5 million, it seems the government may not have thought the idea through.
Also Read: Crypto will be worthless, says the fund manager who made $20B during the 2008 financial crisis.
Last week on Friday, protestors took to the streets to oppose El Salvador’s adoption. In addition, hundreds of demonstrators marched through San Salvador, voicing their concerns about Bitcoin and its volatility. Daniel Munevar, a Colombian economist, believes the president is putting both the country’s coffers and a potential IMF loan at risk.
It’s one thing for an American to bet his stimulus check on cryptocurrency in the hope of big returns, but this is Yolo [you only live once] investing elevated to the national level
said Daniel Munevar
Moreover, economists also fear the government is moving forward without studying the project’s implications. El Salvadorans believe that crypto’s volatility puts everyday investors at risk. In addition, the country is already struggling with poverty and deep-seated corruption.
Many of President Bukele’s decisions, such as firing the Supreme Court judges, have been criticized as undemocratic and corrupt. Without directly mentioning any specific country, the IMF highlighted several things that could go wrong if an unstable economy embraces decentralized digital currencies.
Without robust anti-money laundering and combating the financing of terrorism measures, cryptoassets can be used to launder ill-gotten money, fund terrorism, and evade taxes. This could pose risks to a country’s financial system, fiscal balance, and relationships with foreign countries and correspondent banks.
IMF in its blog
Moreover, governments would lose control over monetary policy, as Central Banks cannot set interest rates on a foreign currency. The international financial institution also highlighted Bitcoin mining’s enormous power requirements. President Bukele is yet to enact his plan to use renewable energy for mining.
Meanwhile, The O.G Crypto Struggles To Break Above $50K
Bitcoin bulls rejoiced when BTC prices broke above $50,000 on August 21. However, the digital currency failed to consolidate and has been trading between $46,000 and $50,000. Incidentally, BTC’s 26-Day (Blue) Exponential Moving Average trendline acts as support at $46,818.82.
Further support for BTC is at $44,638 and $42,296. Though the prices are trading horizontally, BTC is still bullish across short and long-term ranges, as it is trading above its 50-Day (Green) and 200-Day (Red) MA trendlines.
Also Read: Research shows Bitcoin is set to hit a new record high despite a sell-off near $50K.
In case of an upswing, Bitcoin would find resistance at $49,404.37. In addition, $50,000 still acts as strong resistance for BTC. If bulls manage to consolidate above the $50,000 mark, the next resistance at $52,169 might cap further upside movement.
MACD, a trend-based momentum oscillator, turned bearish for BTC on August 24. A bearish outlook is indicated when bars on the MACD histogram move below zero.
The histogram charts the difference between the MACD line (difference between 12-Day and 26-Day EMA) and the MACD signal line (9-Day EMA of MACD). The MACD forecasts bearish signals when the MACD line moves below its signal line.
The relative strength index for BTC is in neutral regions, with a value of 55.70. Trading volumes are low as well.
At the time of writing, BTC was trading at $48,214.86, up 1.59% on the day.
