Bitcoin briefly nose dives 18%, dogecoin tumbles 30% and market stages wipeout as El Salvador makes crypto legal currency

Ether ETHUSD, +1.60% trading on Ethereum’s blockchain, the No. 2 largest crypto by market value, was down 12% at $3,461.97, but had hit a low at $3,036.30.

Popular meme asset dogecoin DOGEUSD, +1.26% was down 17%, at last check, at 25.3 cents, but had drifted lower to trade at 21 cents on the session.

Strategists said there was no immediate catalysts for the sudden drop and its recovery, but investors also noted that Coinbase Global Inc. COIN, -2.43%, the U.S.’s largest crypto exchange, reported trading problems due to volume on its platform.

As of 1:40 p.m. Eastern Time, Coinbase reported that its technical problems had been resolved.

The turmoil in digital assets comes as El Salvador officially became the first country in the world to adopt bitcoin as legal tender, allowing Salvadorans to do everything from buy goods and services to paying taxes.

Check out: Bitcoin is legal tender in El Salvador. What does it mean for the broader crypto market? Some bulls think ‘it could be huge’

Fawad Razaqzada, market analyst at ThinkMarkets.com, said that the recovery in crypto coincided with a tweet from Salvadoran leader Nayib Bukele, who vowed to buy the decline in bitcoin.

Razaqzada said bitcoin’s struggle to stay above a price at $50,000, which some technical analysts view as a point of resistance, may provide some fodder for crypto skeptics and raise concern among digital-asset enthusiasts.

“Whether this will ignite fresh momentum buying remains to be seen. Bitcoin repeated failure to hold above $50K must be concerning some bullish investors,” the ThinkMarkets analyst wrote.

Stocks also were under some pressure on Tuesday, with the Dow Jones Industrial Average DJIA, -0.30% and the S&P 500 index SPX, -0.28% trading lower, in the first trading session after the Labor Day holiday in the U.S.