Criticism from ECB Officials on Bitcoin

According to the European Central Bank's Ulrich Bindseil and Jurgen Schaaf, Bitcoin has fallen short of its promise to become a global decentralized digital currency. Despite the recent approval of an ETF for bitcoin, these officials maintain that the cryptocurrency is not suitable for legitimate transfers or investments.

Disapproval of Bitcoin as a Means of Payment

Ulrich Bindseil, the director general of market infrastructure and payments, along with Jurgen Schaaf, the adviser for market infrastructure and payments, are giving a thumbs down to the world's most valuable cryptocurrency. They argue that the recent approval by the U.S. Securities and Exchange Commission does not change the fact that bitcoin lacks utility as a means of payment or as an investment.

In a statement, they expressed their disagreement with the belief that bitcoin investments are safe and that its previous rally was an indication of inevitable success. Instead, they maintain that the fair value of bitcoin remains at zero.

Historical Critique of Bitcoin Growth

Overall, the European Central Bank officials remain skeptical about bitcoin's long-term viability as a digital currency and investment asset.

The Reality of Bitcoin in El Salvador

The European Central Bank (ECB) recently pointed out that even in El Salvador, where bitcoin is recognized as legal tender and citizens were gifted $30 in free bitcoin, the cryptocurrency still falls short as a successful form of payment.

Not a Sound Investment

In addition to criticizing bitcoin's efficacy for transactions, the ECB also dismisses it as an investment opportunity. They argue that unlike real estate or stocks which generate cash flow or dividends, bitcoin fails to offer any tangible benefits. It cannot be utilized productively like commodities, nor does it hold intrinsic value like gold jewelry or fine art. Less informed retail investors are lured by the fear of missing out, often resulting in financial losses.

Price Resilience and Manipulation

Despite its limited utility, bitcoin has shown resilience in terms of price. The ECB suggests that this resilience may be attributed to market manipulation tactics such as wash trading and pump-and-dump schemes. With a decrease in average trading volume, these manipulative strategies have become more effective. The ECB notes a significant drop in trading volumes, emphasizing that daily volumes were merely 500,000 in the past year compared to the 2 million recorded between 2019 and 2021. Moreover, a study conducted in 2022 revealed that approximately 51% of daily bitcoin trading volume could be fabricated.

Social Media Reaction

Following the ECB's critical assessment of bitcoin, supporters of the cryptocurrency took to social media platforms to share their perspectives.