Bitcoin Losing Value After ECB Criticism
Recently, attacks against the Bitcoin from the establishment resumed, as an ECB ex-chief criticized the cryptocurrency, highlighting that it is not a real currency and that buying is in many respects speculating. He also went against Facebook's cryptocurrency, the Libra, including Stablecoins on his criticism.
"I am strongly against bitcoin, and I think we are a little complacent," said the ECB ex-chief Jean-Claude Trichet during a conference in Beijing, "The currency itself is not real, with the characteristics that a currency must-have," he added, explaining that acquiring this cryptocurrency amounts to speculation.
Bitcoin has been attacked many times in the past, mostly for its doubtful usefulness as a currency, as it has high price volatility and the fact that it is used to make illegal transactions. Many of the criticism is assuming that Bitcoin is an alternative to the traditional Fiat money system.
Buying bitcoin and cryptocurrencies is "in many respects pure speculation," continued Trichet. "Even if is supposed to be based on underlying assets, I am observing a lot of speculation. It is not healthy," he added.
The bitcoin, together with other popular cryptocurrencies, was recently amid a rally that ended up being sold-off during the Saturday session, with Bitcoin losing around 5.75 percent of its value in the evening, followed by the Ripple, which lost 5.77 percent. Instead, investors decided to favour other cryptocurrencies, as the Litecoin gained 4.95 percent while Stellar Lumens went up by 2.56 percent. The last time Bitcoin was amid a bubble was in 2017 (the first one was on 2011) when it reached the $20,000 level to fall after to its historical minimum (around the $3,150 level) and given its recent resurge (its current value is around 50 percent of its historical maximum!) some suggest that another massive run is approaching.
But not everyone in the establishment rejects the usefulness of this technology, as other countries have expressed their enthusiasm for it, for example, Tunisia is about to launch its own cryptocurrency, called E-Dinar, Singapore's central bank is planning on launching blockchain system for cross-border payments together with JP Morgan and China has claimed recently that its own electronic currency is about to come to light. However, questions about regulating them Persist, and at the moment a somewhat unified approach towards them still doesn't exist, while other countries prefer to remain on the sidelines.
“It’s not something that we are actively considering,” said the Federal Reserve Chairman when asked about this topic, “it raises substantial, significant issues that we want to see carefully resolved,” he added.
The industry is currently attempting to provide more stable alternatives to traditional cryptocurrencies, like Stablecoins, whose main goal is providing an alternative with low price volatility that would make them more suitable to replace traditional fiat money. The Canadian Central Bank also joined the effort, as it recently launched its CUSD.
“I have great doubts of keeping control of monetary value in [the cryptocurrency] domain," he said when asked about Stablecoins, adding that he preferred the IMF's Special Drawing Rights (or SDRs) instead.
"In the so-called new stable international currencies the SDR would be the right basket,” he added.
By 9:41 GMT the Bitcoin lost about 1.63 percent of its value against the US dollar, falling to the 8,690.6 level.
- Currency Pairs