By Michael Scott
The European Central Bank (ECB) advisors lashed at Bitcoin, indicating its failure to become the global decentralized crypto. The advisors doubled their pessimistic view of Bitcoin becoming the global decentralized crypto. Instead, the ECB officials attribute Bitcoin’s failure to its vulnerability to manipulation and fraud.
In a Thursday, February 22 blog post, the ECB officials revealed disapproval of Bitcoin’s suitability as Bitcoin’s an investment and payment means.
ECB Advisors Downplay Bitcoin Value
The ECB duo Ulrich Bindseil and Jürgen Schaaf downplayed the U.S. Securities and Exchange Commission (SEC) move to approve 11spot Bitcoin exchange-traded funds (ETFs).
The duo labeled the January 10 approval notice as new clothes to the naked emperor. The advisors argued that the approval barely alters the fact that Bitcoin is unsuitable for investment and payment.
The ECB post illustrates that Bitcoin’s disciples consider the ETF approvals affirming its safety. Such is evident as a triumph in the subsequent rally in the Bitcoin price.
Bindseil and Schaaf differed with the claims, instead indicating that Bitcoin’s fair value is zero. They forecasted that bitcoin would suffer a boom and bust cycle. The advisors regretted that the collateral damage could reach massive figures. They cited that environmental damage is likely to feature the redistribution of wealth while the less fortunate bear the most significant casualty.
The blog post disclaimers that the views do not represent ECB’s perspective. However, the authors have active roles within the ECB. Bindseil is the ECB’s Director General, heading the market infrastructure and payments. Schaaf has an advisory role within the same unit. Ironically, the ECB promoted the blog post using the official X (formerly Twitter) account.
Bankers Fault Bitcoin-based Transactions as ‘Inconveniencing’
Bindseil and Schaaf lamented the inconvenience of Bitcoin-based transactions, alleging snail speed and being expensive for use outside the criminal activity sphere on the darknet.
The authors reflect on Bitcoin’s suitability for use in settling payments. They cited that even El Salvador hardly established its successful utilization in payments despite granting the token legal tender status.
The authors cited the absence of regulatory initiatives necessary to combat the en-mass criminal use to safeguard the Bitcoin network. The authors add that Bitcoin is vulnerable to price manipulation.
The ECB officials added that Bitcoin mining by leveraging the proof-of-work consensus yielded huge environmental pollution that matches other countries. Besides, the Bitcoin price rally translated to high energy consumption.
The move by the US Department of Energy to gather energy user data from the crypto miners as indicative of Bitcoin’s price rally as evidence attracted opposition. Riot Platforms’ head of research, Pierre Rochard, disapproved of the assessment, illustrating a mid-2023 publication in Advances in Applied Energy supporting crypto mining on the power grids.
Rochard indicated that the June 2023 publication illustrated scientific evidence that Bitcoin is stabilizing the grids via the demand response. The vice president of research downplayed the urgency of collecting the energy-use data.
The criticisms from the ECB advisors illustrated that Bitcoin’s suitability as an investment is flawed, given the inability to generate cash flow. One cannot utilize Bitcoin productively as witnessed in other commodities, thus offering no social benefit.
The ECB advisors indicated that the less financially knowledgeable retail investors often attract the Fear of missing out (FOMO), a trend that leaves them vulnerable to losing money.
Climate tech investor Daniel Batton responded to the post, indicating a bullish perspective. The CH4 Capital partner revealed that the previous publication by the ECB saw Bitcoin rally 197%.
Batton urged the ECB to keep the Fear, uncertainty, and doubt (FUD), indicating that over 400 million globally have discovered vaccination against such.
ECB’s Publication ‘Last Gasp’ Marked the Bear Market Bottom
The recent criticism of Bitcoin by the ECB reignited the November 2022 event when the officials considered the token within the last gasp before plunging into irrelevance. The remarks coincided with the bear market that cast the crypto market into a prolonged winter with multiple collapses led by the crypto exchange FTX implosion.
The argument by the ECB illustrates that Bitcoin’s suitability as a financial asset is inevitably wrong. Nonetheless, Bitcoin ultimately hit the downtrend, with the token testing $16,000 at the top of the bear market.
Since then, Bitcoin has rallied 225% to test $51,900, per CoinGecko data. The ECB advisors attributed the rally to the expected turnaround in the Federal Reserve policies. Besides spot Bitcoin ETF approval, the looming supply crunch following April halving is fueling the uptrend.
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