The price of Bitcoin has fluctuated significantly in the last 24 hours. The price of the largest cryptocurrency at the time of writing was at $37.800, recording gains of 7.61% compared to yesterday, while in the morning trading it was up to $37.100, recording gains of 13%. Bitcoin, however, is still well below the record $64.829 which occurred in April.
The launch of Bitcoin is due to the decision of El Salvador to adopt it in its transactions. Lawmakers in the Central American country have passed a law that makes Bitcoin a legal tender. This means, among other things, that prices can now be displayed in Bitcoin and tax levies can be paid in digital currency.
The country has partnered with digital wallet company Strike to create a state-of-the-art financial infrastructure in the country that will use bitcoin technology. In addition to Bitcoin, other cryptocurrencies rose, as Ether and XRP both moved higher.
In any case, market fears of impending regulatory intervention and repression undoubtedly play a key role in Bitcoin’s high volatility. Commercial banks are trembling at the possibility of a mass withdrawal of funds from their depositors and their placement in cryptocurrencies. This will reduce their main source of funding and possibly increase their borrowing costs, affecting both the cost and the availability of their credit to borrowers. Such a development though, will negatively affect the stability of these institutions and the banking system.
That is the reason why major central banks and regulators around the world are slowly trying to control and direct the new developments.