According to Ulrich Bindseil, Director General of the European Central Bank (ECB), and ECB adviser Jürgen Schaaf, the cyber currency Bitcoin is on its way to insignificance following the renewed price crash in the wake of the FTX bankruptcy.
Before the FTX collapse, Bitcoin proponents had hoped for a respite on the way to new highs if the price stabilized. “It was already clear in advance that it was more of a last gasp on the road to irrelevance,” said a blog post by the two ECB experts, which the European Central Bank (ECB) published on its website on Wednesday. The article was also published in the “Handelsblatt”.
The collapse of FTX dragged the price of bitcoin down
The price of Bitcoin, the oldest cyber currency, fell below $16,000 for the first time since 2020 in the wake of the FTX collapse. Other cryptocurrencies such as Ethereum and Ripple had also suffered heavy losses. With prices currently hovering around $16,800, Bitcoin has lost more than 63 percent of its value since the start of the year. As late as November 2021, the price had peaked at around $69,000. Industry price antics and scandals, such as the collapse of the FTX, had recently sparked global calls for strict regulation. For example, the Financial Stability Board (FSB) advocates global rules and made several recommendations in October.
For the ECB neither means of payment nor investments
From Bindseil and Schaaf’s point of view, Bitcoin is questionable as a means of payment. Bitcoin cannot be used as an investment either. The market valuation is purely based on speculation, the authors write. Their claim: “Since Bitcoin does not appear to be suitable as a payment system or a form of investment, it should not be treated as either from a regulatory point of view – and thus legitimized.” helping to create trust in something that ultimately “has no economic value” and therefore cannot be a wise investment.
“Similarly, the financial industry should beware of the long-term harm of promoting Bitcoin investment,” Bindseil and Schaaf warn. And this despite the potential for short-term gains, they added. Should Bitcoin investors suffer further losses, the negative impact on customer relationships and reputational damage to the entire industry could be enormous.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
