As a result of the collapse of the FTX exchange, the European Central Bank issued a press release considering 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 useless”
After the recent collapse of the world’s second largest cryptocurrency exchange, FTX, the European Central Bank (ECB) he met with several global regulators to take stock of the cryptocurrency market and establish clearer key points of regulation.
The apparent stabilization of bitcoin’s value is likely to be an artificially induced last gasp before the crypto asset starts down a road of irrelevance. #TheECBlog 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
Called “Bitcoin’s Last Stand”, this press release has the ambitious objective “to provide an update on the state of Bitcoin”. If the full picture is not painted objectively, the ECB provides us zoom in on the recent fall and Arguments debunked more often.
ECB analysis highlights only the recent fall from $69,000 to around $17,000, without, however, putting it into perspective. In fact, the cryptocurrency market has always experienced periods of significant increases punctuated by bearish phases, known respectively as a bull run and a mark market.
However, according to analysts from the European Central Bank, Bitcoin is unlikely to rise again but should definitely sink, “which was already predictable before FTX went bankrupt” :
“For bitcoin proponents, this apparent stabilization on the way to new highs is a sign of relief. However, it is more likely to be an artificially induced last gasp before the road to obsolescence. »
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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 that have already been dismissed many times in the past. Starting with the fact that “BTC is barely used for legal transactions”.
Otherwise, despite Satoshi Nakamoto’s initial ambitions to create a decentralized global currency, the ECB believes so “Design and technology shortcomings make Bitcoin questionable as a payment method” :
“Real bitcoin transactions are very difficult, 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 story of bull and bear cycles in the crypto market. Indeed, according to them, Bitcoin is also not suitable as an investment and its evolution arises only from pure speculation:
“It does not generate cash flow (like real estate) or dividends (like stocks), it cannot be used productively (like commodities) nor does it provide social benefits (like gold). The market valuation of Bitcoin is therefore based on pure speculation. »
Finally, the ECB argues that it is the regulatory attention that cryptocurrencies are currently receiving from legislators around the world is possible “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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Lilian Aliaga
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