Market Wrap Year-End Review: El Salvador Adopted Bitcoin, Then Bought the Dip

The country’s adoption of BTC as legal tender wasn’t enough to keep the cryptocurrency near $50K in September.

AccessTimeIconDec 29, 2021 at 9:17 p.m. UTC
Updated May 11, 2023 at 3:40 p.m. UTC
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Hi Market Wrap readers! During the final two weeks of 2021, we’re using this space to recap this year’s most dramatic moments in cryptocurrency markets – and highlight the key lessons from this fast-evolving corner of global finance. Over a series of eight posts that started on Dec. 20 and that will run through Thursday, we’ll recap what shook crypto markets this year. (For the latest crypto-market prices and news headlines, please scroll down.)

In Tuesday’s post, we explored how alternative coins or “altcoins” rallied during the first part of the year – illustrating just how far the year’s explosion in popularity for digital-asset markets extended beyond bitcoin, the largest cryptocurrency by market cap. Bitcoin’s market capitalization relative to the total crypto market capitalization sharply declined between March and May as traders shifted attention to other areas of the crypto universe. Then from June through August, non-fungible tokens (NFTs) became all the rage among artists and crypto investors. Even though bitcoin trading volume was relatively low, investors were able to seek out opportunities far and wide in the alt space. Tesla CEO Elon Musk tweeted his nostalgia for the days of high bitcoin volatility.

But BTC’s sideways trading pattern didn’t last long. Today, we’ll show how bitcoin was able to break out of its two month-long price range of around $30,000 as El Salvador, the tiny Central American country that previously had used the U.S. dollar as the country’s primary currency, came to the rescue.

El Salvador buys in

In June, El Salvador President Nayib Bukele, announced that bitcoin would become legal tender, making his country the first to make that move, which also meant no capital gains taxes for bitcoin holders there.

Bitcoin rose about 70% from a low of around $30,000 toward a high of nearly $50,000 in early September as traders reacted to the news from El Salvador – seen by many fans of the 12-year-old digital asset as a long-awaited validation of its potential to serve a global currency. El Salvador’s bitcoin’s law went into effect in September.

Bitcoin dips

When the law actually took effect, bitcoin’s price began to sell off – a classic “buy-the-rumor, sell-the-fact” scenario. (A similar thing had happened earlier in the year, when the big cryptocurrency exchange Coinbase held its direct stock listing on the Nasdaq exchange.)

Bukele tweeted that El Salvador was ready to buy on price dips even as BTC continued to fall. A growing number of users on social media platforms, including Twitter and Reddit, called for people to buy small amounts of bitcoin in support of El Salvador’s bitcoin policy, Bloomberg reported. Many investors were already betting the news could give the oldest cryptocurrency a price boost.

On Sept. 13, software company MicroStrategy purchased an additional 5,050 BTC for about $242 million in cash. Still, BTC continued lower.

BTC declined from $50,000 toward $40,000 and ended September on a down note.

Concerns were growing over a possible credit default by the Chinese property developer Evergrande Group, shaking speculative assets including equities and cryptocurrencies; lower risk appetite among investors also contributed to bitcoin’s September slump.

The takeaway for crypto traders from the July-August price action was that El Salvador’s decision to make BTC legal tender wouldn’t be enough to keep the cryptocurrency’s price elevated at $50,000. Bitcoin’s correlation with stocks increased along with the credit concerns in China.

Still, the nearly 7% BTC drop in September looked far less severe than the 50% price crash in April and May. After some ups and downs, bitcoin’s price had again stabilized at well above 2020 levels as some traders began to anticipate a $100,000 BTC price by year end.

Relevant News

Latest prices

  • Bitcoin (BTC): $47,239, -1.0%
  • Ether (ETH): $3,7234, -2.5%
  • S&P 500: +0.1%
  • Gold: $1,805, -0.3%
  • 10-year Treasury yield closed at 1.553%, up 0.07 percentage point.

CoinDesk 20

Here are the biggest gainers and losers among the CoinDesk 20 digital assets, over the past 24 hours.

Biggest gainers:

Asset Ticker Returns Sector
Algorand ALGO +8.5% Smart Contract Platform
Litecoin LTC +1.4% Currency
Cosmos ATOM +0.9% Smart Contract Platform

Biggest losers:

Asset Ticker Returns Sector
Filecoin FIL −4.8% Computing
Chainlink LINK −4.1% Computing
XRP XRP −3.9% Currency

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.


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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Damanick Dantes

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

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