““Bitcoin has failed to deliver on its promise to be a global decentralized digital currency and is still barely used for legitimate transfers. The recent approval of the ETF does not change the fact that Bitcoin is not suitable as a means of payment or as an investment.“
These are Ulrich Bindseil, Director General for Market Infrastructure and Payments, and Jürgen Schaaf, Advisor for Market Infrastructure and Payments, at the European Central Bank, expressing their admiration (again) for the most valuable cryptocurrency in the world by market cap.
They were writing after the US Securities and Exchange Commission last month approved spot bitcoin exchange-traded funds. “For traders, the official approval confirms that Bitcoin investments are safe and that the previous rally is evidence of an unstoppable victory. We disagree with both claims and reiterate that the fair value of Bitcoin remains zero.
This is not a new position, as they authored a similar article in November 2022, where they described the move from $69,000 to $17,000, and then up to $20,000, as “the last artificial moment before the road to irrelevance.” At $51,111 as of Thursday morning, Bitcoin (BTCUSD),
He's still breathing.
In the new post, the ECB pair points out that even in El Salvador, where Bitcoin is a legal tender and where citizens have been given $30 in free Bitcoin, it is still not a successful means of payment.
They consider Bitcoin an investment as well: “It generates no cash flow (unlike real estate) or dividends (stocks), cannot be used productively (commodities), and provides no social benefit (gold jewelry) or personal appreciation.” Based on outstanding capabilities (artistic works). Less financially experienced retail investors are attracted by the fear of missing out, leading them to potentially lose their money.
So how can they explain the elasticity of cryptocurrency prices? Manipulation, through methods such as wash trading and pump-and-dump, which they note may be more effective now that average trading volume is down, saying trading volumes last year were what they call a “meager” 500,000 a day, compared to 500,000 a day. About 2 million per day between 2019 and 2021. They also cite a 2022 study that found 51% of Bitcoin's daily trading volume is likely fake.
Bitcoin enthusiasts responded to the ECB's post on social media.
