- Bitcoin reverses on day El Salvador starts using it as legal tender
- European shares are weaker at the open
- Stagflation concerns not assuaged by UK tax rises
You couldn’t really have set it up better. On the day El Salvador made Bitcoin legal tender, the asset plunged by 16 per cent. It’s almost as if the inherent volatility in Bitcoin makes it really bad at being a currency that people use to spend and save. After hitting a fresh high above $52,000 overnight, prices dropped to under $44,000 before finding some stability around the $45,000 area. Not a good start to its life in the mainstream. It simply underscores the fact that it is not a good means of payment or reliable store of value. The El Salvadoran government apparently bought more Bitcoin on the dip.
Cathie Wood of Ark was talking on Bitcoin – responding to comments by investor John Paulson. She wheeled out the Bitcoin-bro case that it’s not just digital gold, it’s new global monetary system. She said it’s not subject to the whims of policymakers – in fact it’s a hedge against the whims of policymakers. That may be or may not be, investors should be extremely cautious. The impoverished people of El Salvador don’t have much choice.