27.04.202215:06 Forex Analysis & Reviews: El Salvador is struggling with mainstream Bitcoin adoption

According to a recent report published by the US National Bureau of Economic Research, El Salvador's strategy to introduce the state-owned Chivo bitcoin wallet inside the country, if not failed, is very close to it. The reason is the fact that only four out of 10 Salvadorans who downloaded the Chivo state Bitcoin wallet said they were still using it after receiving an incentive payment of $30 in bitcoins. A similar bonus plan was paid by the Government of El Salvador and was personally supported by President Nayib Bukele.

The report indicates that most users who have used Chivo after spending a $30 bonus no longer interact with the app. More than 1,800 households took part in the survey. The majority stated that they had never withdrawn funds from an ATM, or made payments using a new application. And although most residents of El Salvador have a mobile phone with Internet access, less than 60% of them have downloaded the wallet offered by the government.

Why the new application has not gained the desired popularity is understandable - no one wants the government to see and control their income and expenses. Given that the country's economy is largely shady, there were not many people willing to "shine" their operations in front of the central bank. Chivo is also not widely used to receive money transfers from abroad, which was emphasized during the development of this application. A recent report by the Central Bank of El Salvador said that only about 1.6% of money transfers were received by digital wallets in February, the month when the study was conducted. In the first quarter of 2022, almost no one registers new wallets, and the share of money transfers in bitcoin is at its lowest level since the launch of Chivo Wallet.

In addition, the report says that only 5% of Salvadorans paid taxes using bitcoin, while 20% of firms still accept bitcoin as payment. 11.4% said they had positive transactions using cryptocurrency. Let me remind you that last year, the pricing function was removed in the digital bitcoin wallet of Salvador Chivo, which allowed users to quickly make a profit on transactions. This decision was made to minimize speculation involving the world's largest cryptocurrency.

Considering that the active phase of the introduction of bitcoin into the country is gradually coming to an end, all these manipulations have led to an increase in the cost of the national debt. This is how investors react to the decisions of the authorities. The IMF warned last year about the financial and regulatory problems of using cryptocurrencies, and at the same time, Moody's Investors Service said that the introduction of bitcoin jeopardizes the program with the fund, which eventually happened - El Salvador has so far been left without money from the fund and negotiations have reached an impasse.

As for Bitcoin. Investors' fear is gradually increasing again as the US stock indices fall, which pulls the cryptocurrency market down with them. The downward correction of bitcoin is still visible now, as buyers have not been able to cope even with the 100-day moving average, which is around 41,000. At the moment, for the development of the initiative on the part of the bulls, active actions are needed in the area of $ 39,300, which will quickly return the trading instrument to $ 40,800, allowing investors to calm their nerves a little. The fact that bitcoin continues to enjoy support from major players may mitigate its decline, which is expected after the report of American technology companies this week. The decline of the American stock market will surely pull bitcoin down with it. In the event of a fall in the trading instrument, only a breakdown of the $ 37,700 level will fail the trading instrument below the minimum of $ 36,00, and there it is at hand to $ 34,300. The bears' furthest target will be the $ 32,900 area.

As for the ether. The focus remains on the $ 3,000 resistance. A breakthrough of this level will quickly return the ether to $ 3,158, and there is $ 3,306 very close. The 200-day moving average passes in the area of $ 3,480, which will also be a serious problem for traders. Only the consolidation above will continue the upward trend for the trading instrument with the prospect of updating the highs in the area: $ 3,540 and $ 3,685. In the event of a return of pressure on ETH, purchases in the area of large support of $ 2,800, which the bulls have repeatedly defended recently, are not excluded. A break in this range will be a reason to go to the lows: $ 2,660 and $ 2,500, where the major players will again begin to actively act.