The European Central Bank says Bitcoin is dead
The European Central Bank paints a very pessimistic view for Bitcoin (BTC/USD), noting that the flagship cryptocurrency is now at its “last stand” and may be headed for “irrelevance.”
As for the reason for this outlook, the ECB points to Bitcoin’s crash from (highs of $69,000 reached in November 2021, to lows of $16,000 – following the collapse of Terra LUNA in May and crypto exchange FTX last month.
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For crypto devotees, the crypto winter will eventually give way to another bull run that sees prices reach new highs. This is due to the exit of weak hands amidst the massive accumulation below and around $20,000.
However, for the ECB, any price rise from now on will not be due to the cryptocurrency’s value, but purely driven by speculation.
According to the bank, Bitcoin is not only unsuitable for payments, it is also not worthy as an investment. First, BTC does not generate cash flow in the same way as property or dividends as with stocks. Bitcoin also has no productive value as raw materials or provides social benefits as is the case with, for example, gold.
In short, Bitcoin’s market value is directly based on speculation.
Private investors are being misled
While the ECB says that Bitcoin’s bubble has already burst, it notes that the speculation and misconceptions about regulatory developments and the entry of financial players give undue legitimacy to the crypto industry. The central bank suggests that such a perspective not only harms investors, but also threatens a reputational risk for the banks involved.
“Since Bitcoin appears to be neither suitable as a payment system nor as a form of investment, it should be treated as neither in regulatory terms and therefore should not be legitimized. Similarly, the financial and banking industry should be wary of the long-term damage of promoting Bitcoin -investments – despite the short-term profits they may make (even without their skin in the game).”
Bitcoin is hovering around $17,000 after crashing hard since hitting a record high.
There have been 467 Bitcoin obituaries so far
Although not the first, this is the most aggressive attack on Bitcoin by the ECB so far.
As Invezz previously reported, executive board member Fabio Panetta said in April that the crypto bubble had burst, threatening the entire financial ecosystem in something that could be worse than what happened during the 2008 financial crash.
But it’s also not the first time Bitcoin has been declared dead. Since its inception in 2009, there have been 467 Bitcoin obituaries – all indications are that the bubble had finally burst. In 2022, with the bear market crashing crypto prices, Bitcoin has been declared dead 27 times. The ECB’s Ulrich Bindseil and Jürgen Schaaf’s comments provided the latest case of Bitcoin death.
The oldest death case was in 2010 when it was claimed that BTC could not be a currency.
