Despite the great success of Bitcoin, critics still hide
European Central Bank advisers have described the US Securities and Exchange Commission's January approval of bitcoin as a “new coat of arms for an impoverished emperor”.
The advisors, Ulrike Bindseil, Market Infrastructure and Payments ECB. CEO and consultant Jürgen Schaaf criticized Bitcoin as inappropriate as an investment or payment method.
ECB Advisors Test Bitcoin's Validity
While the approval of the Bitcoin ETF in January was seen as crypto-proof and a sign of its future success, Bindsil and Schaaf disagree. The ECB's post for Bitcoin “disciples” states that the approval of the ETF will ensure its safety, as evidenced by the following price rally.
The two advisors argue that Bitcoin's true value is zero. They fear another cycle of crash and chaos in the economy, including massive foreclosures, environmental damage and redistribution of wealth that will harm the uninformed.
The authors also noted that Bitcoin transactions are slow, inconvenient and costly, and aside from illegal activities on the dark web, the cryptocurrency has little use for payments. Furthermore, while El Salvador has achieved legal tender status, it has not been able to establish it as a viable payment method.
Bindsil and Schaaf argue that regulatory efforts to curb the large-scale criminal use of Bitcoin have been ineffective. The price of the cryptocurrency has also experienced a lot of abuse, and Bitcoin mining using the power-based verification-between-work agreement method, continues to pollute the environment on the same scale throughout the countries.
The advisors also emphasized that Bitcoin is not a suitable investment because it cannot generate cash flow. Unlike commodities, Bitcoin cannot provide social benefits because it has no use. In addition, they expressed concern that retail investors with little financial knowledge are at risk of losing money due to the fear of losing money.
Criticism of the ECB's ‘last gasp'.
The latest criticism follows an ECB blog that said Bitcoin is approaching its “last gasp” before it becomes irrelevant in November 2022. The comments coincided with a market crash following the collapse of the FTX crypto exchange.
In the post, the ECB argued on the premise that Bitcoin is a financial asset destined for continued growth. However, Bitcoin had hit a bear market low of $16,000 for the week before the article was published, but has since had a strong correction, rising 225% to reach $51,930.
Meanwhile, in response to the question, “Why is this dead cat going up?”, ECB advisers pointed to several reasons for the big change in Bitcoin. A potential change in the US Federal Reserve's interest rate policy, April's decimation event for Bitcoin, which saw miners' rewards halved, and the recent launch of spot ETFs have all been pointed to as key drivers behind the volatility.
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