Experts at the European Central Bank have criticized the SEC’s approval of spot exchange-traded funds for bitcoin as legitimizing a currency with effectively zero value. In a blog post, Ulrich Bindseil and Jürgen Schaaf argue that the recent rally in bitcoin’s price is not a sign of its sustainability or value as an investment.
They point out that in the mid-2010s, the belief that bitcoin’s value would continue to rise dominated the narrative. However, the authors argue that bitcoin is not a suitable investment or a viable means of payment in the real world.
Bindseil and Schaaf also believe that the SEC’s approval and lower interest rates have opened the floodgates for Wall Street to invest in bitcoin, leading to a speculative bubble. They argue that while temporary factors may drive up the price of bitcoin, in the long run, its value will return to zero as it lacks any cash flow or other returns.
The authors also express concern about the manipulation of bitcoin’s price in an unregulated market, the use of bitcoin for criminal activities, and the lack of effective measures to address these issues. They criticize the SEC’s approval of bitcoin ETFs and the EU’s regulation of crypto assets, stating that they only serve to mislead less informed investors into thinking bitcoin is a safe and sound investment.
In conclusion, the authors state that bitcoin’s price does not reflect its sustainability, and there is no fair value or economic data to make accurate forecasts. They argue that the effectiveness of the bitcoin lobby is evident in the reflation of the speculative bubble, and the overall social damage that will occur when it eventually collapses.
