Market recovers after flash crash on El Salvador adoption
After a flash crash last Tuesday as El Salvador officially made Bitcoin legal tender, the leading crypto asset has steadied around $45K.
What was expected to be a historic day of celebration became one of the most volatile days of the year. The party was cut short by technical problems, and Bitcoin dropped by $10K in a matter of hours. It then clawed back losses over the next few days as Panama revealed its own Bitcoin legislation and Ukraine moved ahead with legalization.
Only a few altcoins had the strength to swim against the bearish tide: Tezos pushed 30% higher on the launch of an NFT collection from American rapper Doja Cat, and Algorand added an astonishing 60% on the back of a new DeFi fund.
This Week’s Highlights
- Algorand adds 60% in defiance of market downturn
- Cardano falls on smart contract debut
Algorand adds 60% in defiance of market downturn
As the crypto market turned red, Algorand came up green. The token topped $2.50 on Sunday, marking year-to-date gains of more than 630%.
The rally was driven by a flurry of positive news, including the announcement of a DeFi fund that aims to put $300 million towards helping Algorand contend with Ethereum and other smart contract platforms.
Only two weeks ago, Algorand was hitting headlines for another big announcement, as it was selected by El Salvador for the development of its government blockchain infrastructure.
Cardano falls on smart contract debut
Weeks of consecutive wins have made Cardano the third-largest crypto asset by market cap, but it fell 12% this week on the long-awaited launch of smart contracts.
The Alonzo hard fork went off without a hitch on Sunday. This marks Cardano’s most significant technical upgrade yet, and lays the foundations for a new era of DeFi smart contracts and non-fungible tokens (NFTs) on the blockchain.
According to eToro Crypto Market Analyst Simon Peters, “this critical upgrade could lead Cardano to take some market share away from ‘competing’ networks such as Ethereum, and potentially lead to “appreciation of the price of ADA.”
Although Bitcoin has fallen over 10% since last week, El Salvador’s adoption is likely to have a bullish effect in the long-term. This is the view of Bloomberg’s September Crypto Outlook, which suggests that $100K price levels for BTC represent “the path of least resistance.”
In the short-term, markets are braced for the release of the Consumer Price Index (CPI) on Tuesday. This could give a clearer indication of U.S. inflation levels, potentially revealing the macroeconomic landscape that Bitcoin will need to navigate over the next few months.