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European Central Bank (ECB) officials, in a recently published blog post, challenged the idea that the approval of spot Bitcoin exchange-traded funds (ETFs) in the USA and the subsequent price surge are proof of the largest cryptocurrency’s viability as an investment tool. ECB’s Director General of Market Infrastructure and Payments Ulrich Bindseil and Advisor Jürgen Schaaf argued that Bitcoin might offer short-term gains but lacks a “fair value” that could underpin serious predictions about its future performance.
They Listed Fundamental Negatives for Bitcoin
The blog post questioned the recent rally in the cryptocurrency market following the approval of spot Bitcoin ETFs in the USA, likening the surge to a dead cat bounce. ECB officials reiterated that despite the approval of ETFs by the US securities watchdog and billions of dollars flowing into the largest cryptocurrency, the bank continues to view Bitcoin as an unreliable investment and an inefficient payment instrument.
According to Bindseil and Schaaf, the approval of spot Bitcoin ETFs represents “the emperor’s new clothes,” and despite the approval, Bitcoin’s fair value continues to be zero. The officials targeted the largest cryptocurrency’s high volatility, high transaction fees on its network, slow transaction times, and the high energy consumption related to mining, emphasizing that the ECB is focused on introducing the digital Euro as a secure alternative to private cryptocurrencies.
As is known, the European Union is implementing a comprehensive regulatory framework for cryptocurrencies and related services, while the ECB continues to prioritize the development and introduction of a digital Euro. Bindseil and Schaaf also highlighted the ECB’s efforts to create a reliable currency issued by the central bank as a safe alternative to decentralized cryptocurrencies like Bitcoin.
Three Reasons Indicated for the Latest Surge in the Crypto King
On the other hand, Bindseil and Schaaf pointed to three factors triggering the current rise in Bitcoin’s price: ongoing manipulations in an unregulated market, increased demand for the currency in illegal activities, and deficiencies in regulatory oversight. They underscored the absence of any fair value to make reliable predictions about Bitcoin’s future performance and warned about the potential consequences of a market crash.
ECB officials called on authorities to take measures to protect the public from a potential collapse of the cryptocurrency market, emphasizing the need for continued regulatory measures. They warned that the task of protecting against risks associated with cryptocurrencies has not yet been fully achieved, stressing the importance of ongoing regulatory efforts to mitigate potential negative impacts on society.
