|
|
As the U.S. Securities and Exchange Commission (SEC) gave the green light to Bitcoin last month, the world's largest cryptocurrency witnessed another surge in popularity. However, the European Central Bank warned investors on Thursday not to be fooled, stating that Bitcoin remains a long-term scam.
Last month, the SEC approved the first batch of Bitcoin-tracking exchange-traded funds (ETFs) to be listed in the United States. In response, analysts at the European Central Bank described this development as "the emperor's new clothes," reaffirming their long-standing view that this cryptocurrency has no real value and could pose more problems than it solves.
According to reports, these problems include environmental damage and wealth redistribution, harming those with less market knowledge.
Ulrich Bindseil and Jürgen Schaaf from the European Central Bank wrote in a blog post, "For followers, formal approval confirms that investing in Bitcoin is safe, and the previous rebound proves an unstoppable victory. We disagree with both claims and reiterate that Bitcoin's fair value remains zero."
European Central Bank experts argue that Bitcoin lacks in generating cash flow or other value-based returns, making it a poor investment. The use of digital currencies in anonymous network crimes further erodes its potential use cases as a daily payment method.
Moreover, Bitcoin mining continues to pose environmental issues.
"Alas, all these risks have materialized," the bank wrote.
In January, the U.S. SEC gave the green light to 11 U.S. spot Bitcoin ETFs. These investment tools are touted as entry points for investors to easily access the world's largest cryptocurrency and have helped drive the total market capitalization of cryptocurrencies to $2 trillion for the first time since April 2022.
The European Central Bank wrote, "For society, the new cycle of prosperity and recession of Bitcoin is a terrible prospect. The damage it brings will be enormous, including environmental damage and ultimately wealth redistribution at the expense of ordinary investors."
Bindseil and Schaaf attribute the Bitcoin frenzy to rampant price manipulation, increased demand for "crime currency" from outside, and deficiencies in regulatory judgments and measures. They also added that if the Federal Reserve were to cut interest rates this year, it could further fuel the rise of Bitcoin.
"In the short term, inflows of funds may have a huge impact on prices, and everyone will ignore the fundamentals. But in the long run, prices will eventually return to fundamental value," they wrote in the report.
"Without any cash flow or other returns, the fair value of some assets is zero. Any price divorced from economic fundamentals is equally unsustainable — just an illusion inflated by charlatans," they added.
Finally, European Central Bank officials called for authorities to remain vigilant in monitoring Bitcoin-related crimes, stating that this work is not yet done. |
|
Post time 1-3-2024 20:54:27
