Posted:
- The ECB believes that Bitcoin has no value
- The rise in prices threatens “enormous” collateral damage to society, it added
2024 was a year of meteoric rise Bitcoin (BTC). Now that BTC has registered a price increase of more than 100% in the past year and has crossed the line $1 trillion market capitalization threshold does not seem to stop the king coin. aHowever, amid this financial euphoria, the European Central Bank (ECB) has issued a stark warning.
According to the ECB, the perceived value of BTC is misleading. It went further participation that the intrinsic fair value remains at zero despite current market performance.
“There is no ‘proof of price’ in a speculative bubble…..Market cap quantifies the overall social damage that will occur if the house of cards collapses.”
Has the SEC Gained to the Pressure on Bitcoin ETFs?
In a revealing blog post titled “ETF Approval for Bitcoin – The Naked Emperor’s New Clothes,” Ulrich Bindseil, ECB Director General for Market Infrastructure and Payments, and advisor Jürgen Schaaf argued that the international community views Bitcoin with skepticism, citing minimal social benefits and regulatory challenges. However, lobbying and social media campaigns led to regulatory compromises, which were seen as a nod to BTC’s investments.
In the US, the SEC initially favored Bitcoin futures ETFs, finding them less volatile and manipulable. However, a court ruling in August 2023 forced the SEC to approve Spotting ETFs.
The analysts noted:
“Bitcoin has not lived up to its promise of being a global decentralized digital currency and is still barely used for legitimate transfers. The latest approval of an ETF does not change the fact that Bitcoin is not suitable as a means of payment or as an investment.”
Why is this ‘dead’ coin bouncing high?
The blog highlighted that the aThe fall 2023 rally was fueled by expectations of a shift in US Federal Reserve interest rate policy, the halving of BTC mining rewards, and the SEC’s approval of a Bitcoin spot ETF. These factors increased investors’ risk appetite and promised significant inflows of funds into Bitcoin, essential for sustaining a speculative bubble.
However, this rebound could be short-lived as long-term value tends to be in line with fundamentals. For Bitcoin, this could theoretically be zero due to the lack of cash flow or returns.
Crime Behind Bitcoin’s Resilience
While the current rally can be attributed to the factors mentioned, the analysts pointed to three factors that explain BTC’s resilience:
“The continued manipulation of the ‘price’ in an unregulated market without supervision and without fair value, the growing demand for the ‘currency of crime’ and shortcomings in the authorities’ judgments and actions.”
However, Chain analysis‘“2024 Crypto Crime Trends” highlighted another trend. Over the past two years, stablecoins have overtaken Bitcoin in terms of illegal transaction volumes. Bitcoin still remains common for specific illegal activities such as sales on the darknet and ransomware. Meanwhile, a majority of crypto crimes, especially scams and transactions with sanctioned entities, have moved to stablecoins.