Crypto News: Bitcoin Uneasy as El Salvador Outlines Plans for “Bitcoin City”

Bitcoin is having a rough week as India floats plans to ban crypto transactions. Meanwhile, other standards like Solana are enjoying record-setting months.

Bitcoin was having a good year until recently. After posting a record-high in October, the digital coin took a nosedive when investors traded in their currency for profit in early November. This morning, Bitcoin is still down 17% from its all-time high twenty days ago. Investors are cautiously eyeing a new law proposed in India that will ban most crypto transactions, possibly denting the value of Bitcoin and other currencies.

Headlines from around the web have crypto enthusiasts talking Tuesday morning, though. The first involves sneaker manufacturer Adidas. In a recent tweet, the shoe company announced a partnership with the digital currency exchange platform Coinbase.

Meanwhile, El Salvador, the first country to accept Bitcoin as legal tender, has announced plans to build a city from the profits generated by its crypto bonds. President Nayib Bukele spoke at an event highlighting the country’s crypto push last weekend, stating that Bitcoin returns will initially fund the new building project.

Adidas and Coinbase

Adidas announced its partnership with Coinbase on November 24, joking that it was “probably nothing.” The company also plans to create digital items for use in virtual reality spaces like the Metaverse. The German sportswear manufacturer kickstarted this effort by purchasing a plot of virtual land in The Sandbox. The Sandbox is a virtual reality space maintained by the blockchain.

Analysts point out that Adidas’s move into virtual items coincides with a bumpy year for manufacturing and shipping. The beleaguered international shipping infrastructure continues to cause problems for manufacturers around the world. Adidas warned shareholders that this quarter might not meet expectations as a result of logistic bottlenecks.

The sportswear company might manage to make up the difference with digital clothing items sold as NFTs, though. Also called non-fungible tokens, NFTs are a subtype of cryptocurrency that act as ledgers to verify the ownership of virtual goods.

“That’s something big because it is also a hint of what’s about to hit the fan in a couple of months in the NFT space: the Adidas sneakers and other branded virtual clothes, shoes, and objects,” says Swissquote analyst Ipek Ozkardeskaya.

Bitcoin City

El Salvador Bitcoin
Shutterstock

El Salvador’s President Bukele told reporters that the new building project would create a city in the eastern region of La Union, near a volcano. The government plans to build a geothermal power plant near the volcano to make the most of the region’s existing thermal vents. El Salvador tailor-made this energy plan to address concerns about Bitcoin’s energy consumption.

“Invest here and make all the money you want,” Bukele said during the event in Mizata. “This is a fully ecological city that works and is energized by a volcano.” Moreover, Bukele told reporters, the city will not apply any taxes to citizens aside from a value-added tax or VAT. Half of that tax will pay for public services, while the other half will fund the Bitcoin bonds that bankroll the city’s construction.

The plan is part of El Salvador’s crypto gamble. Bukele insists that Bitcoin will only go up in value over time. As such, he suggests, El Salvador stands to become a financial hub as the standard rises.

Banning Crypto

Bitcoin Crash
Shutterstock

El Salvador is the most optimistic country when it comes to the future of cryptocurrency. It stands in stark contrast with China and India, two of the world’s largest population centers. China’s government has already banned cryptocurrency entirely, arguing that the private standard expends too much energy and allows criminals to launder money too freely.

India is poised to follow in China’s footsteps. The country’s parliament introduced a new bill on Monday that will ban private crypto transactions. It’s presently unclear whether the Indian government will still allow investors to trade digital currency under tighter restrictions or if the ban will shut down the digital coins in the country altogether.

“If it is a blanket ban, in combination with China, you’re talking two centers of the world’s population that are effectively frozen out of crypto,” says eToro crypto analyst Simon Peters. Bitcoin’s value fell with the news Monday before recovering slightly on Tuesday, settling around $58,000 by the time of this writing.

Other Currencies Overperform

While Bitcoin is struggling this week, other crypto assets are still posting gains. Solana is enjoying eye-opening increases this month, posting a 22% return over the past 30 days. Litecoin, likewise, increased in value by nearly 15 percent in that same time frame.

Winter is historically a painful season for crypto. Bitcoin’s harshest drop came at the end of 2017, an event that enthusiasts bitterly remember as the “Crypto Winter”. Bearish analysts expect a similar drop this year, with the volatility of central bank tapering and crypto bans hanging over the standard. After winter, though, some investors are calling for a recovery of epic proportions.

Is now the time to buy Bitcoin, or is the standard poised to dip even deeper? Investors are weighing those options ahead of the holiday spending season.

Author
Latest News