The value of some of the top cryptocurrencies has fallen early late Tuesday, shaking investors' confidence yet again. Bitcoin was down around 11%, Ethereum retreated by 12% and Dogecoin coin fell 18%.
This drop is usually associated with cryptocurrencies' volatile nature, but with this latest dip, analysts agree that El Salvador's Bitcoin Law implementation has something to do with it.
Before sinking in price, bitcoin has hit its highest price level since May at $52,000 on Tuesday. Ethereum traded close to $4,000, while Dogecoin was, at one point, able to hit over $0.31 per token.
Analysts have attributed the sinking in prices to Bitcoin Law finally taking effect in El Salvador. The Bitcoin Law has finally turned bitcoin into the country's official tender, along with the U.S. dollar, which means that the country recognizes Bitcoin as its official currency.
Aside from being able to use Bitcoin as payments for goods and services, the government would also allow citizens to use bitcoin to pay taxes. And to further support Bitcoin use, El Salvador wouldn't impose capital gain taxes on Bitcoin exchanges. The government clarified that the price of bitcoin will be tied to the current dollar exchange rate.
Prior to the Bitcoin Law's official implementation, the government has purchased around $20 million worth of BTC and has installed 200 Bitcoin ATMs all over the country.
Meanwhile, a few predictions for the second-largest cryptocurrency market have been made public.
The price of Ethereum could soar by $5,000 by end of the current year, and hit the $10,000 mark later on, crypto analysts said.
As of this writing, Ethereum is valued at $2,974.9, shedding 1.68% in the past 24 hours, CoinDesk figures show. However, the crypto is still a significant 416% growth compared to the $730.36 value it reached on January 1.
Despite the contrast between Ethereum price ranges in May and August, the crypto displayed an impressive performance in the last few months. As a result, investors have become more upbeat about its long-term potential.
Nobody yet knows for sure what Ethereum's price will be by end of the year. However, market observers examined the previous data and tried their best to predict the crypto's growth trajectory in the coming months.
Some 42 cryptocurrency experts from Finder disclosed that Ethereum would be valued at $4,600 by end of 2021.
According to The Sun, Ethereum would then climb to $17,810 by 2025 and $71,763 by 2030.