The cryptocurrency market received unexpected but welcomed support from the government of El Salvador, which approved Bitcoin as an official means of payment. Although this is a precedent in world practice, this decision was made by a very small country with a small economy. The official currencies of the country are now the U.S. dollar and Bitcoin. This is very symbolic and an epic progression for crypto-enthusiasts.
Of course, Bitcoin is not adopted by one of the leading economies like Sweden or Britain; nevertheless, authorities of the major central banks may take this event very seriously, though they won't show their concern publicly. Yesterday we saw a precedent where the competition with national currencies became really tangible. And Bitcoin's reaction was very fast: BTC has added more than 10% in the past 24 hours, encouraging retail investors to buy.
On the technical analysis side, Bitcoin received unusually timely support as it once again tested its 200-day moving average. This local victory may potentially cool the bears, who have been persistently pushing down Bitcoin for the last two months. But it's too early to talk about a victory for the bulls: BTCUSD needs to consolidate above $40K and develop growth from this level to finally break away from the bearish trend.
As a pioneer in introducing cryptocurrency as official means of payment, El Salvador may well be intent on becoming a cryptocurrency offshore at a time when tax havens are under increasing pressure. In fact, tax havens are becoming a thing of the past, and the corporate tax rate has trended toward equalization on a global level.
Smaller third-world countries are preparing to take this chance to attract quiet capital and crypto-millionaires who risked being exposed because of the widespread tax transparency. If this is the factor at play, Bitcoin is poised for impressive long-term growth.
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