One of the things that many anti-crypto proponents claim is that Bitcoin is a bubble. And now that Bitcoin has sunk in its lowest for 2018, mainly because of a number of reasons including the Bitcoin Cash hard fork, warning coming from finance and economic experts are here once again. This time around, Benoit Couere who is a European Central Bank (ECB) Executive Board member warned that Bitcoin is a bubble.
He was speaking at the Bank for International Settlements in Basel when Coeure mentioned that “a combination of a bubble, a Ponzi scheme, and an environmental disaster”. It is true that Bitcoin mining operation is known for being energy intensive. Sadly, Bitcoin mining has been known to possibly increase the temperature of the world by 2 degrees in the near future.
In the last two days, the price of Bitcoin dropped by 15% mainly because of the fork of Bitcoin Cash. It was a software upgrade that not everyone agreed. And because of this, it has put a dark cloud in the crypto industry which is why Bitcoin and other cryptocurrencies were also down.
As for Coeure’s comment regarding Bitcoin, it is true that Bitcoin’s price was under $1,000 during the start of 2017 only to go to almost $20,000 by mid-December. But as regulators implemented changes in the industry, the crypto market went bearish from there.
Coeure mentioned that “Bitcoin was an extremely clever idea. Sadly, not every clever idea is a good idea” He also added that “Few remember that Satoshi embedded the genesis block with a Times headline from January 2009 about UK banks’ bailout. In more ways than one, Bitcoin is the evil spawn of the financial crisis”.
IMF Issuing Their Own Digital Currency?
Coeure spoke after the International Monetary Fund managing director Christine Lagarde this week and suggested that central banks should have their own version of digital currencies.
Coeure isn’t the only outspoken critic to Bitcoin. In fact, among those who has the same opinion regarding Bitcoin is Nouriel Roubini who is the same person who predicted the 2008 financial crisis. He said that “I could gloat about Bitcoin collapsing 10% in a day to $5,700. But that is still some way to zero where Bitcoin belongs. Actually, since Bitcoin is the Mother of All Toxic Pollutions & Environmental Disasters its true fair value is highly negative with the right externality tax”.
Also, you have the likes of Warren Buffet who compared Bitcoin to rat poison. Could it be true that Bitcoin’s bubble has popped? Bitcoin was trading steadily at around $6,200 to $6,500 for a couple of months. In fact, it was even more stable than tech stocks such as Amazon. However, the recent drop has been seen by some crypto experts only to be a “technical move”. They pointed out a number of factors including the tech stocks sell-off as the reason for its recent drop.
Is this going to be a short-term drop for Bitcoin? Could there be a chance that it is going to go up once again and recover?