Although Bitcoin has been on the rise since the second half of last year, the European Central Bank (ECB) maintains its prediction that the real value of the cryptocurrency market's most voluminous coin is 'zero'.
According to information compiled by Borsagundem.com, the ECB says that the fair value of Bitcoin is zero and that the recent rise will lead to 'massive collateral damage'.
Don't be fooled by the rise
While the cryptocurrency market feels like it has received a stamp of approval to move into the mainstream with the launch of spot Bitcoin ETFs in the US, the European Central Bank says "Don't be fooled by this," reports Insider's Yuheng Zhan: "Bitcoin is still a long-running scam story."
In a blog post, analysts at the ECB described last month's approval of Bitcoin ETFs as 'new clothes for the naked emperor', reiterating their long-held view that the cryptocurrency has no real value and is likely the cause of more problems than it solves. These problems include environmental damage and a redistribution of wealth to the detriment of those who understand less about the market.
Ulrich Bindseil and Jürgen Schaaf of the ECB wrote: "For market amateurs, the official approval of ETFs confirms that Bitcoin investments are safe, and the recent rise is seen as evidence of an unstoppable victory. We disagree with both claims and reiterate that the fair value of Bitcoin is still 'zero'," he writes, warning investors that the 'Bitcoin bubble' is being re-inflated uncontrollably.
The potential use case is weak
ECB experts say that Bitcoin is failing to deliver cash flow or other value-based returns, making it a poor investment vehicle. "Excessive cybercriminal activity taking advantage of the digital currency's anonymity further undermines its potential use case as an everyday payment method. Moreover, Bitcoin mining through the proof-of-work mechanism continues to raise environmental concerns," the blog post said. "Unfortunately, all of these risks have materialized," the analysts added.
The US Securities and Exchange Commission (SEC) gave the green light to 11 US spot Bitcoin ETFs in January. The investment vehicles were touted as an easier entry point for investors to access the world's largest cryptocurrency, helping the total cryptocurrency market capitalization reach $2 trillion for the first time since April 2022.
"For the social fabric, a renewed boom-bust cycle of Bitcoin presents a dire prospect. And the collateral damage, including environmental damage and the eventual redistribution of wealth at the expense of the less developed, is likely to be enormous," the ECB analysts write.
