In the wake of the collapse of the FTX exchange, the European Central Bank issued a press release taking stock of the situation of Bitcoin (BTC) and other cryptocurrencies. Titled “Bitcoin’s Last Stand,” this ECB blog post destroys Bitcoin. What is it and what should we remember?
Bitcoin “on the way to uselessness”
After the recent collapse of the former world’s second largest cryptocurrency exchange, FTX, the European Central Bank (ECB) met with some global regulators to take stock of the cryptocurrency market and establish the main points of a clearer regulation.
The apparent stabilization of bitcoin’s value is likely to be an artificially induced last gasp before the crypto-asset begins on a road to irrelevance. #TheECBblog looks at where bitcoin stands amid widespread volatility in the crypto markets.
Read more https://t.co/Hk1LuYX2de pic.twitter.com/I3Uidks8Xo
— European Central Bank (@ecb) November 30, 2022
Entitled “Bitcoin’s Last Stand”, this press release has the ambitious objective of “to provide an update on the situation of Bitcoin”. Failing to paint the full picture objectively, the ECB offers us a zoom on the recent fall and arguments debunked many times over.
ECB analysis highlights only the recent fall from $69,000 to around $17,000, without, however, putting into perspective. Indeed, the cryptocurrency market has always experienced periods of significant increases punctuated by bearish phases, known respectively as bull run and bear market.
However, according to analysts from the European Central Bank, Bitcoin is not likely to rise again but should definitely sink, “which was already foreseeable before FTX went bankrupt” :
“For bitcoin proponents, this apparent stabilization is a sign of respite on the way to new highs. However, it is more likely to be an artificially induced last gasp before the road to uselessness. »
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The return of prejudices about Bitcoin
In this blog post, Ulrich Bindseil and Jürgen Schaaf, Director General and Advisor to the ECB, came out of the closet prejudices already demystified many times in the past. Starting with the fact that “BTC is hardly used for legal transactions”.
Otherwise, despite Satoshi Nakamoto’s initial ambitions to create a decentralized global currency, the ECB believes that “Bitcoin’s design and technological shortcomings make it questionable as a means of payment” :
“Real bitcoin transactions are cumbersome, slow and expensive. Bitcoin has never been used in any significant way for legal transactions in the real world. »
Similarly, analysts have brushed aside the narrative of bull and bear cycles in the crypto market. Indeed, according to them, bitcoin is also not suitable as an investment and its evolution results only from pure speculation:
“It does not generate cash flow (like real estate) or dividends (like stocks), cannot be used productively (like commodities) or provide social benefits (like gold). The market valuation of Bitcoin is therefore based on pure speculation. »
Finally, the ECB insists on the fact that the regulatory attention that cryptocurrencies are currently receiving from legislators around the world can “be misconstrued as an endorsement”. In addition, she warned banks against interacting with cryptocurrencies, which could damage their reputation.
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Source: ECB press release
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