““Bitcoin has failed on the promise to be a global decentralized digital currency and is still hardly used for legitimate transfers. The latest approval of an ETF doesn’t change the fact that bitcoin is not suitable as means of payment or as an investment.””
That’s Ulrich Bindseil, director general of market infrastructure and payments, and Jurgen Schaaf, adviser for market infrastructure and payments, at the European Central Bank, giving their thumbs down (again) the world’s most valuable cryptocurrency by market cap.
They were writing after the U.S. Securities and Exchange Commission last month approved spot exchange-traded funds for bitcoin. “For disciples, the formal approval confirms that bitcoin investments are safe and the preceding rally is proof of an unstoppable triumph. We disagree with both claims and reiterate that the fair value of bitcoin is still zero,” they say.
It’s not a new stance, having authored a similar piece in Nov. 2022, in which they called a move from $69,000, down to $17,000, and then up to $20,000, “an artificially induced last gasp before the road to irrelevance.” At $51,111 as of Thursday morning, bitcoin
BTCUSD,
is still breathing.
In the new post, the ECB pair point out even in El Salvador, where bitcoin is legal tender and where citizens were given $30 in free bitcoin, it’s still not a successful means of payment.
They also pan bitcoin as an investment, as well: “It does not generate any cash flow (unlike real estate) or dividends (stocks), cannot be used productively (commodities), and offers no social benefit (gold jewellery) or subjective appreciation based on outstanding abilities (works of art). Less financially knowledgeable retail investors are attracted by the fear of missing out, leading them to potentially lose their money.”
So how can they explain the cryptocurrency’s price resilience? Manipulation, via methods such as wash trading and pump-and-dump, which they note may be more effective now that the average trading volume has gone down, saying volumes last year were what they call a “meager” 500,000 per day, compared to about 2 million per day between 2019 and 2021. They also cite one 2022 study finding that 51% of daily bitcoin trading volume is likely bogus.
Bitcoin enthusiasts responded to the ECB post on social media.
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