11.06.202111:09 Forex Analysis & Reviews: El Salvador passes bill that legalizes Bitcoin

Bitcoin rallied on Thursday amid news that El Salvador passed the bill that legalizes the cryptocurrency. It returned to $ 36,300 and is now trying to climb higher. El Salvador President Nayib Bukele said this will help counter the low status of the entire banking system, not to mention reduce the cost of sending remittances.

But many are still skeptical because corruption casts doubt on the real use of cryptocurrencies. Experts, including the International Monetary Fund, are really alarmed by the move because apparently, it can create a shadow market for Bitcoin, and make El Salvador a "haven" for cybercriminals and fraudsters.

IMF spokesman Jerry Rice also said El Salvador's acceptance of Bitcoin as legal tender may bring risks and challenges for the central bank, especially since the market does not have any regulatory framework. In view of this, the IMF set virtual meetings with authorities from El Salvador to discuss this issue. In the near future, representatives may also set up a face-to-face meeting with Bukele.

And following the news, El Salvador's bonds plummeted, increasing the yield by 71 basis points to 7.8%. According to Bloomberg, this is the worst performance this week.

Bukele also announced that El Salvador began exploring other options for Bitcoin mining. "Our engineers have just informed me that they have dug a new well that will provide approximately 95 MW of clean geothermal energy with zero emissions from our volcanoes," Bukele said. Apparently, he plans to use volcanic energy to mine cryptocurrencies. Miners say this decision is a right move.

As noted above, Bitcoin bounced off $ 31,000 and traded at $ 36,300. Now, it is around $ 41,100, where a lot depends today. Going above it will result in a jump towards $ 46,700 and $ 52,000, while a drop below will push Bitcoin down to $ 25,700 and $ 21,600.