Bitcoin Legalization in El Salvador an Ill Move: JP Morgan
July 13, 2021
Following the legitimization of Bitcoin (BTC) as a legal tender in El Salvador, JP Morgan & Chase Co.’s Latin American research team published a report termed “The Bitcoinization of El Salvador,” which highlighted some of the pitfalls of the undertaking. The lead analyst on the JPM team who authored the report noted that:
“It is difficult to see any tangible economic benefits associated with adopting bitcoin as a second form of legal tender.”
The report highlighted that:
“Recent surveys suggest widespread skepticism and hesitance of bitcoin as a medium of exchange… with extreme volatility posing a particularly acute challenge in a bimonetary system alongside official dollarization.”
The lead analyst explained that while the benchmark cryptocurrency’s daily trading volume often surpasses $40 billion – $50 billion, a significant amount of coins are locked in illiquid entities, with over 90% of BTC not exchanging hands annually.
The JPM report further explained that the illiquidity and nature of the volume of BTC are “potentially a significant limitation on its potential as a medium of exchange.”
However, many Bitcoin enthusiasts countered the JPM report, highlighting that it did not acknowledge the Lightning Network. Three primary wallets used in El Salvador come with the Lightning Network; the government’s upcoming Chivo wallet, the Bitcoin Beach wallet, and Jack Mallers’ Strike app.
Key Bitcoin Levels to Watch — July 13
BTC continues to struggle to maintain a bullish bias, as bears prevented a break into the $35k region yesterday. Bulls now struggle with keeping the primary cryptocurrency above the $33,000 – $32,700 axis in the near term.
Bitcoin is buoyed by the ascending trendline/wedge at the $32,700 level, making this support level very critical for the cryptocurrency. A fall below this line could initiate a drop to the $32k round figure. That said, a successful defense of the $32,700 support area over the coming hours could propel BTC back to the $34k resistance.
Meanwhile, our resistance levels are at $33,700, $34,000, and $35,000, and our key support levels are at $32,700, $32,000, and $31,000.
Total Market Capitalization: $1.36 trillion
Bitcoin Market Capitalization: $621.9 billion
Bitcoin Dominance: 45.6 %
Market Rank: #1
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