Meme crypto? Social media pumps Bitcoin before El Salvador makes it legal currency

September 6, 2021, 1:39 PM UTC

El Salvador is making Bitcoin legal tender and users on social media are planning a celebration in its honor.

A movement across Twitter and Reddit is calling for followers of Bitcoin to buy $30 of the cryptocurrency on Sept. 7 in honor of El Salvador becoming the first country to take up the cryptocurrency as legal tender.

Posters on Reddit optimistically suggested that if all 3,316,862 community members buy $30 of Bitcoin each on Sept. 7, $99,505,860 will be added to the currency.

Bitcoin has surged recently, hitting $52,000 at one point Monday—its highest level since May. This has come amid a broader resurgence in cryptocurrencies, after Bitcoin fell below $30,000 in July.

But why $30?

The El Salvador government has created a $150 million fund to finance the conversion between Bitcoin into U.S. dollars. Citizens who download the government’s digital wallet—named ‘Chivo’—and enter their ID number will receive $30 in Bitcoin for free. This $30 in Bitcoin is meant to foment the use of the cryptocurrency and can only be spent as Bitcoin—the original recipient cannot convert it back into U.S. dollars—though those who are paid with it will be able to convert it, El Salvador’s president, Nayib Bukele, said in June.

Salvadoran Finance Minister Alejandro Zelaya said he expects 2.5 million citizens to download the wallet. El Salvador has a population of almost 6.5 million.

As the introduction of Bitcoin has approached, El Salvador began installing Bitcoin ATMs to help citizens convert the digital currency into U.S. dollars, and President Bukele took to using crypto to lure tourists and entrepreneurs to the Central American destination.

Break the Internet

The promotion of Bitcoin parallels some of the other coordinated price pumps arranged recently on social media, such as ‘meme stock’ jumps in video game retailer GameStop.

Coordinated buying and selling of financial assets is a great worry to financial regulators such as Britain’s watchdog, the Financial Conduct Authority, whose chair Charles Randell dedicated a large chunk of his Sept. 6 speech to the Cambridge International Symposium on Economic Crime to reality TV star Kim Kardashian.

In a paid advertisement post, Kardashian asked her 250 million Instagram followers to speculate on a crypto token and ‘join the Ethereum Max Community’. Ethereum Max, not to be confused with the more broadly known Ethereum cryptocurrency, is a speculative digital token created earlier this year.

“It may have been the financial promotion with the single biggest audience reach in history,” Randell said.

Randell’s discussion of Kardashian in the meeting “shows just how concerned the FCA is about the level of financial promotion of crypto assets on social media,” said Susannah Streeter, markets analyst at Hargreaves Lansdown.

“The watchdog is clearly horrified at the lack of controls implemented by major social media platforms,” she said, adding that the FCA is worried that financially vulnerable people are getting lured into “get rich quick” schemes and going into debt to speculate on cryptocurrencies.

Whether Reddit and Twitter users will be able to coordinate a GameStop like price jump for Bitcoin is not clear, however.

“Saying something and actually doing it are very different,” Vijay Ayyar, head of Asia Pacific with cryptocurrency exchange Luno in Singapore, told Bloomberg.

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