ETF approval for bitcoin – the naked emperor’s new clothes
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ETF cannot turn bitcoin from black to red
Central Bank analysis: How did this dead cat (BTC) jump so high?
Will bitcoin ultimately rely on traditional financial approval?
ETF cannot turn bitcoin from black to red
Ulrich Bindseil, Director-General of Market Infrastructure and Payments at the European Central Bank (ECB), and advisor Jürgen Schaaf, wrote an article stating that even with the introduction of bitcoin ETFs, bitcoin has not fulfilled its promise of becoming a “globally decentralized digital currency” and is difficult to transfer legally. ETFs have not changed the fact that bitcoin is unsuitable as a “means of payment” or “investment.”
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The ECB states:
The increase in bitcoin brought about by ETFs does not prove that bitcoin’s victory is unstoppable. We reiterate that bitcoin’s “fair value is still zero,” and the prosperity cycle of bitcoin is a terrible prospect accompanied by significant harm, including environmental damage and wealth redistribution at the expense of novice traders.
The ECB states that the risks of bitcoin mentioned in their 2022 article “Bitcoin’s last stand” have now become reality:
Illegal payments remain the primary use: Even if El Salvador grants BTC legal tender status, it still cannot make bitcoin a widely accepted form of payment.
Bitcoin is still unsuitable for investment: No cash flows (real estate), dividends (stocks), difficult usability, and lacks social value (gold jewelry).
Environmental pollution: Bitcoin’s impact on the environment is equivalent to a national scale due to its proof-of-work consensus mechanism.
Central Bank analysis: How did this dead cat (BTC) jump so high?
The ECB believes that factors contributing to the rise of bitcoin include:
Halving of mining rewards
SEC approving spot ETFs
Expectations of interest rate cuts by the Federal Reserve
However, the ECB sarcastically points out that while bitcoin aims to challenge the demonized traditional financial system, it ultimately relies on traditional intermediaries to reach a broader group of investors.
The conclusion mentions that bitcoin’s price level is not sustainable, lacks fundamental economic data to speculate its fair value, and is difficult to prove its price rationality in speculative bubbles.
The ECB calls on governments:
Authorities must remain vigilant in protecting society from money laundering, cybercrime, and other related crimes. (Bitcoin) will cause economic losses to people with low financial literacy and cause significant environmental damage. This work is not yet complete.
In terms of the main argument of the entire article, “this work” seems to refer to the banning of bitcoin by countries due to its widespread use in criminal activities.
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ECB
European Central Bank
Bitcoin ETF
Further Reading
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