The investment bank said illiquidity and low transaction volumes could place a “significant limitation” on Bitcoin’s potential as a medium of exchange in the Central American country
El Salvador’s adoption of Bitcoin as legal tender later this year could cause problems for both the country and the cryptocurrency, according to analysts at JP Morgan.
According to a Bloomberg report on Sunday, the investment bank said in a report last week that a large amount of Bitcoin is tied up in illiquid entities, around 90% of which has not changed hands in over a year, which could present issues with its use as a medium of exchange by citizens of the Central American nation.
READ: Coinbase rival Bullish plans NYSE listing through SPAC deal
Analysts said daily payment activity in El Salvador would represent around 4% of recent transaction volume on the Bitcoin blockchain and over 1% of the total value of tokens that have been transferred between wallets in the last year.
As a result, JP Morgan said the low volume and illiquidity impact could potentially be a “significant limitation…
