Weekly Cryptocurrency Market Review: Will Others Follow El Salvador's Decision?

El Salvador is the first country to adopt bitcoin as legal tender; other countries with a positive view of the adoption of cryptocurrencies are waiting in the queue. In the area of ​​technology, cardano has recently launched long-awaited smart contracts.

Bitcoin is legal tender in El Salvador

Last week, El Salvador was the first country to adopt bitcoin as legal tender. This means that bitcoin has become the official currency of El Salvador alongside the US dollar. After adopting bitcoin as legal tender, El Salvador made three purchases of this cryptocurrency for a total of 550 bitcoins. In order to increase the scale of implementation of the new means of payment, El Salvador launched its own bitcoin wallet called "Chivo" through which every Salvadoran living in the country can receive the equivalent of $ 30 in bitcoin. Companies in El Salvador are required to accept bitcoin payments, so companies such as Starbucks, Pizza Hut and McDonald's have started accepting payments in this cryptocurrency in the territory of this country.

About the author

Mads Eberhardt, Cryptocurrency Market Analyst, Sax Banks. Cryptocurrency Market Analyst at Saxo Bank. He gained experience as a trader at Bitcoin Suisse AG and founder http://BetterCoins.dk (website taken over by Coinify).

However, the implementation of the new means of payment itself was not smooth. Last week, a significant number of citizens took to the streets to protest against bitcoin adoption due to the uncertainty surrounding the cryptocurrency after the problematic startup of "Chivo" as there was no possibility to download the wallet first, and then an error occurred when trying to make a transfer.

Following the introduction of the new law, El Salvador saw the yields on short-term bonds increase compared to long-term bonds, showing that investors perceive the country's short-term debt as having a higher risk than long-term debt.

Will others follow El Salvador?

Following the example of El Salvador, many other countries last week expressed a positive attitude towards cryptocurrencies. The day after El Salvador, Panama presented a draft law regulating the issue of cryptocurrencies, including the freedom to use cryptocurrencies by recognizing them as an alternative global payment method. However, the draft law does not include the requirement for enterprises to accept specific cryptocurrencies as means of payment.

The cryptocurrency market in Ukraine is likely to leave the gray area soon and will be regulated and legalized, as the Ukrainian parliament last week voted in favor of the cryptocurrency law. In order for this law to come into force, it only needs to be signed by Ukrainian President Volodymyr Zelensky. This came after the president made an attempt to attract cryptocurrency and blockchain companies to the country during an official visit to San Francisco last month.

Time will tell if other countries will follow El Salvador's footsteps and accept bitcoin or other cryptocurrencies as legal tender; so far, no country has made such an intention publicly. The initial problems of El Salvador may make other countries approach the topic more cautiously.

Cardano launches smart contracts

Cardano, the third largest cryptocurrency as measured by market capitalization, launched long-awaited smart contracts via an update called Alonzo. The update was implemented the day before yesterday - September 12 - and was expected more or less from the launch of cardano in September 2017. This update was the main reason for the surge in cardano last month, as a result of which the market capitalization of this cryptocurrency reached a record 95 billion earlier this month USD.

Smart contracts de facto mean that developers can write protocols on the web, such as protocols for decentralized trading or lending. Such protocols in particular contributed to the sharp rise in popularity of cryptocurrencies such as Ethereum or Solanaemphasizing the importance of cardano supporting smart contracts. However, the biggest challenge is yet to come as this cryptocurrency now needs to build a large ecosystem that attracts users to the web in order to maintain its relevance in the future. For example, cardano has been considered a "ghost chain" by cryptocurrency influencers due to the lack of its own ecosystem. The time has come for this cryptocurrency to prove its worth by expanding its ecosystem significantly.

What about the charts?

BTCUSD daily chart, period 2016-2021

ETHUSD daily chart, period 2016-2021