Bitcoin (BTC), the original crypto, received a heavy backlash from the European Central Bank (ECB), while, it received a spot Exchange-Traded Fund (ETF) approval in the United States. An ECB blog suggests that Bitcoin has failed to become a global decentralised digital currency, instead falling victim to fraud and manipulation.

Bitcoin faces backlash

The US Securities and Exchange Commission (SEC) approved ETFs for Bitcoin on January 10 sparking optimism in the market. However, the ECB warns against viewing this assent as proof of Bitcoin’s safety and unstoppable success. The Central Bank suggests that Bitcoin’s fair value remains zero despite the ongoing surge.

According to the blog, society faces potentially dire consequences due to this. This includes environmental damage and wealth redistribution.

The Europen regulators highlighted that Bitcoin has failed to fulfill its original promise of becoming a global decentralized digital currency. It points out that BTC transactions are still inconvenient, slow, and costly. 

ECB raised a crucial issue of regulatory efforts to curb criminal activities on the Bitcoin network. However, this also proved to be unsuccessful. The authority underlined that Bitcoin is not a suitable investment as it lacks the essential characteristics of traditional assets. 

This is because BTC doesn’t generate cash flow, dividends, or offer social benefits. The blog calls it the allure for retail investors that often stems from the fear of missing out (FOMO). It exposes them to potential financial losses.

BTC on its way up?

Bitcoin has come a long way from trading around the $16,000 price level in January 2023 to breaching the $52,000 level in February 2024. BTC price is up by around 113% over the last year.

The biggest crypto is up by another 28% in the last 30 days. BTC is trading at an average price of $51,625, at the press time. However, Bitcoin is aiming to hit a new all time high (ATH). Its 24 hour trading volume stands at around $29 billion.

Bitcoin is nearing its major halving event. Meanwhile, the ECB seems to have a problem regarding BTC’s proof-of-work mining mechanism. The regulator mentions that it continues to have an environmental impact. Higher Bitcoin prices are correlated with increased energy consumption, as miners seek to cover higher operational costs.

The ECB further warns of a renewed boom-bust cycle. It cautioned small investors from re-entering the crypto market. However, the cumulative crypto market cap is nearing to reclaim $2 trillion mark with a bullish momentum.

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