European Central Bank: ‘Bitcoin’s irrelevance was predictable before the FTX crash’

The European Central Bank (ECB) has decided to take a hard line on bitcoin (BTC). It appears to be fueled by the “widespread fallout in crypto-currencies following the collapse of a major crypto-currency exchange,” the agency said in a statement.

It stated that “for bitcoin advocates, the apparent stabilization is a sign of a respite on the road to new highs, but it is most likely an artificially induced last gasp before the road to irrelevance, and this was already foreseeable before the FTX bankruptcy“.

Although not mentioned, it is clear that the failure of the U.S. exchange FTX has set off alarm bells at the European regulator. The company is under investigation for allegedly using client funds, without their consent, in risky transactions.

In this sense, the ECB has launched a campaign to criticize the crypto-currency created by Satoshi Nakamoto, according to the text published this November 30. It considers that real transactions in bitcoins are “cumbersome, slow and expensive“. Bitcoin has never been used in any meaningful way for legal transactions in the real world.

The apparent stabilization of bitcoin’s value is likely to be an artificially induced last gasp before the crypto-asset embarks on a road to irrelevance. #TheECBblog looks at where bitcoin stands amid widespread volatility in the crypto markets.
Read more https://t.co/Hk1LuYX2de pic.twitter.com/I3Uidks8Xo

– European Central Bank (@ecb) November 30, 2022

This claim has been disproved several times, the most recent coming from a report by cybersecurity firm Chainalysis. Crypto-currency crime is down 15 percent year-over-year, and in a bear market like the first half of 2022, crime related to bitcoin and other crypto-currencies is down 65 percent.

For the ECB, bitcoin is also unsuitable as an investment compared to real estate, stocks or gold and its value is speculative. However, as of last October, the crypto-currency was less volatile than major Wall Street stocks.

Even bitcoin fully entered Wall Street, when in 2021 three bitcoin exchange-traded funds, also known by their acronym ETF, arrived, making it the year when for the first time a crypto-currency entered as an exchange-traded asset in the world’s financial center.

In addition, there are studies such as that of Harvard University, which recommends that central banks hold reserves in bitcoins, as they can serve as alternative hedging assets.

The ECB is taking this stance against bitcoin at a time when it is moving forward with regulation of crypto-currencies and service providers, which FTX’s fall could accelerate.