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Why Bitcoin and other crypto prices are crashing

 The price of bitcoin fell more than 17% from more than $52,000 per coin to $42,000, before recovering about half of those losses after El Salvador on Tuesday became the first country to accept bitcoin as legal tender. In the first hours after bitcoin's launch, El Salvador's president, Nayib Bukele, said the digital wallet used for transactions was not working.

Tuesday's drop was the most significant setback in a rally that has seen bitcoin rise nearly 75% since late July. The total market value of the cryptocurrency has fallen by about $300 billion in the past 24 hours, according to data from tracker CoinGecko.

The world's largest cryptocurrency has recovered slightly, with bitcoin now at $46,757, down 11%. Meanwhile, other digital currencies followed suit, with Ether falling more than 11% to $3.471, while Dogecoin and Cardano fell 15% and 12% to $0.26 and $2.5 respectively. Stellar, XRP, Uniswap also plunged in the 15-20% range in the last 24 hours.

"Social media platforms were very cautious over the weekend as there could be a sharp drop after flag day in El Salvador," Edward Moya, senior market analyst at Oanda Corp, wrote in a note, Bloomberg reports. Some investors may have bought in anticipation of the introduction of the bitcoin law on Sept. 7 and then moved to "sell the fact," he said.

According to experts, bitcoin remains in a bull market as long as the price remains above $43,000.

Billionaire Mike Novogratz, CEO of Galaxy Digital Holdings and a veteran cryptocurrency advocate, told Bloomberg that the market for digital currencies has surged over the past eight weeks and is oversold. He said interest from retail investors has increased as large institutions have jumped on the cryptocurrency bandwagon.

David Gerard, the author of Attack of the 50-Foot Blockchain, told the Associated Press that Tuesday's bitcoin volatility likely had little or nothing to do with El Salvador. "My first assumption was that it was bullshit because it's always bullshit," Gerard told the AP via email.

"Bitcoin is fundamentally insensitive to market forces or regulatory announcements," Gerrard said. "Price patterns like this, where the price drops sharply within minutes and then rises again, are often burned by margin traders." Given that bitcoin is trading so weakly, it could also have been a big fork that made a big sell-off for cash, sending the market for a ride, Gerrard said.

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