The ECB asserts that Bitcoin has failed to live up to the hype, but the crypto community is not buying it.
The European Central Bank has asserted that Bitcoin is standing on its last legs in a blog post released today titled “Bitcoin’s last stand.”
The apparent stabilisation 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
The post asserts that Bitcoin’s recent price stabilization is not an accumulation before forming new highs but a last-ditch effort by malevolent forces to maintain the hype before it all crumbles. It is authored by Ulrich Bindseil, Director General of Market Infrastructure and Payments at the European Central Bank and his advisor Jürgen Schaaf.
“For bitcoin proponents, the seeming stabilization signals a breather on the way to new heights,” the ECB staff members wrote. “More likely, however, it is an artificially induced last gasp before the road to irrelevance.”
The piece argues that Bitcoin has failed to perform as a means of payment and an investment asset. Instead, according to the article, the only role of the asset class lies in speculation. Notably, it falsely claims that people have hardly used Bitcoin to make legitimate payments.
It comes even after Chainalysis data indicated at the beginning of the year that legitimate crypto use far outpaces illegal usage, putting illicit crypto use at 0.15%.
The ECB post asserts that crypto regulations do not mean acceptance or approval. Finally, to ward off institutional interest in the asset class, it cautioned that institutions risked their reputation by promoting Bitcoin and crypto in light of environmental concerns.
The Crypto Community Responds
Unsurprisingly, the piece attracted a lot of flak from the crypto community, which expressed the view that the central bank feels threatened by the revolutionary asset class and was only trying to spread fear, uncertainty, and doubt with false time-worn narratives.
Terra whistleblower FatMan expressed disappointment as he had attempted to read the article with an open mind only to see false claims about Bitcoin’s usage.
Others, like Cointelegraph’s Joe Nakamoto, pointed out the conflict of interest as the authors are also known proponents of central bank digital currencies (CBDCs).
Meanwhile, German economist Jan Wüstenfeld poked holes at the ECB’s forecasting abilities, sharing a video of ECB president Christine Lagarde in December 2021 asserting that inflation will only go down in 2022. However, Eurozone inflation remains at record highs.
Furthermore, for others, it was a buy signal feeding into the narrative that “crypto is dead” reports tend to be at their highest at the bottom of bearish crypto price cycles.
Reports Of Bitcoin’s Death Are Greatly Exaggerated
It bears mentioning that the crypto community is no stranger to reports that crypto is dead. 99Bitcoins data indicates that Bitcoin has been reported dead at least 466 times over the years. Like previous times and now more than ever, it is safe to say that the reports of its death are greatly exaggerated.
Despite the ECB’s claims, the development of scaling solutions like the Lightning Network has only increased the usage of Bitcoin in payments. El Salvador and the Central African Republic have made Bitcoin legal tender on the back of these advancements. Notably, Brazil recently passed a bill making it a lawful means of payment.
Additionally, institutional adoption continues to rise in response to customer demand and the perceived value of the asset class. Most recently, traditional investment banking giant JP Morgan Chase registered a patent to offer Bitcoin exchange, trading, and custody services. The greater the institutional adoption, the more exposure the emerging market gets to new customers.
There is no love lost between the ECB and crypto. In May, Lagarde asserted that crypto is worth “nothing.”