The European Central Bank (ECB) strongly criticized cryptocurrency on the 30th, saying it was on a “meaningless path.”
In a blog post titled “Bitcoin’s last stand,” Ulrich Bindseil, secretary-general of the ECB, and Jürgen Schaff, analyst, said Bitcoin’s recent price stabilization “means taking a breather on the way to a new peak.”
They said, “But this is the last breath induced artificially before going down an irrelevant path. This was already predictable before FTX went bankrupt and sent bitcoin prices far below $16,000.
Bitcoin surpassed $17,000 on the same day, hitting a two-week high.
Nevertheless, Vijay Ayar, vice president of corporate development and international affairs at cryptocurrency exchange Luno, warned CNBC that “the rebound is likely to be a bear market rally and will not continue.”
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ECB officials’ remarks are gaining traction at a time when the cryptocurrency industry is reeling from the collapse of FTX, once a $32 billion exchange, one of the deadliest failures in recent history.
This year, the cryptocurrency market fell sharply due to the high interest rates of the U.S. Federal Reserve.
Vindzail and Sharp said Bitcoin does not fit the framework of investment and is not suitable as a means of payment.
“The conceptual design and technical shortcomings of Bitcoin make it suspicious as a means of payment: real bitcoin transactions are cumbersome, slow, and expensive,” they wrote. He also pointed out that “Bitcoin has never been used to some extent in legitimate actual transactions.”
In addition, “Bitcoin is not suitable for investment. It does not generate cash flows (such as real estate) or dividends (such as stocks), and cannot be used productively (such as commodities) or provide social benefits (such as gold). Therefore, Bitcoin’s market evaluation is purely based on speculation, he added.
Analysts say that the insolvency of FTX is likely to accelerate digital currency regulations. In the European Union, a new law called the Markets in Crypto Assets (MiCA) is expected to harmonize digital asset regulations across the block.
This is not the first time the ECB has raised doubts about digital currencies.