Bitcoin’s price rally driven by manipulation, criminal acts, and inadequate regulation: ECB officials

Bitcoin’s current price rally is unlikely to be driven by fundamental factors. Instead, it’s attributed to temporary and potentially unsustainable influences, including price manipulation, demand for illegal activities, and misguided regulations, said the European Central Bank (ECB) in a report published this week.

“While the current rally is fueled by temporary factors, there are three structural reasons that may explain its seeming resilience: the ongoing manipulation of the “price” in an unregulated market without oversight and without fair value, the growing demand for the “currency of crime”, and shortcomings in the authorities’ judgments and measures,” the ECB wrote.

The ECB views the recent price rally following the spot Bitcoin exchange-traded fund (ETF) approval as a sign of a potential renewed bubble, similar to previous boom-bust cycles experienced with Bitcoin. They believe this is likely unsustainable and could lead to significant financial losses for investors.

“For society, a renewed boom-bust cycle of Bitcoin is a dire perspective. And the collateral damage will be massive, including environmental damage and the ultimate redistribution of wealth at the expense of the less sophisticated,” the ECB stated.

The ECB argues that Bitcoin’s price movements might not accurately reflect its underlying value due to its lack of intrinsic value, history of fraudulent activity, and potential trading practices and liquidity issues. According to the bank, these factors make Bitcoin more vulnerable to manipulation.

“The history of Bitcoin has been characterized by price manipulation,” noted the ECB. “Manipulation may have become more effective as the trading volumes diminished significantly during the recent marked downturn called

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Author: Vivian Nguyen

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