JPMorgan: Bitcoin acceptance by El Salvadorans could spell trouble for country

Wall Street giant JPMorgan is not entirely satisfied that El Salvador has made bitcoin (BTC) a legal tender in the country. Passing the bitcoin law could create a problem for both Bitcoin and the cryptocurrency, the bank said.

JPMorgan analysts noted that Bitcoin’s daily trading volume is decidedly between $ 40 and $ 50 billion. However, much of this has been internalized during major changes. It also adds that the large BTC port is illiquid, and more than 90% of it has not passed from hand to hand during the year.

This liquidity and volume “significantly limits the potential as a means of exchange,” the banking giant said. This added further:

“The daily payment activity in El Salvador will account for 4% of the recent trading volume in the chain and more than 1% of the total value of tokens transferred between portfolios last year Dec.”

In October, the banking giant also points to some major problems for El Salvador with the introduction of bitcoin. As Bloomberg reports, this includes:

Growing skepticism and resistance to the use of bitcoin as a means of exchange.
Bitcoin’s high volatility, along with the official use of the US dollar, will pose a major problem for its two-year system.
JPMorgan says the imbalance in demand for converting bitcoin into US dollars could “absorb onshore US dollar liquidity.” This can ultimately lead to budget risks and balance of payments risks.

Bitcoin adoption in El Salvador
Last month, the Latin American country passed a bitcoin law that makes legal bidding alongside the US Dollar. As a result, traders and service providers will have to accept bitcoin as a means of payment.

With the adoption of such a bitcoin-friendly measure by President Nayib Bukele, skepticism about its use is growing. The IMF has raised prices for the move, while the World Bank has not given up on technical assistance in implementing bitcoin.

Bitcoin’s latest rollout comes in the wake of the economic downturn facing el Salvador

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