© Reuters
Investing.com – With recent turmoil in the cryptocurrency market, central banks and regulators have stepped up their efforts to get things back on track.
The European Union is already pushing for a new authority (MiCA) to be created to oversee this market, while the ECB is developing a digital euro.
A recent blog post from the European Central Bank shows that the institution is not at all open to bitcoin and other digital currencies. Rather, the authors talk about the fact that bitcoin is only rarely used for legal transactions. In addition, technical conditions make this form of digital currency far from suitable for payment transactions. Since there is no cash flow or dividends, one comes to the conclusion that this is a very bad investment.
The central bank also referred to the fact that more and more established financial institutions are offering cryptocurrency services to their customers. It is understandable that we react to market demand. Banks, however, should carefully assess whether this new line of business is sustainable. It warns of a considerable loss of reputation, due to repeated scandals like and FTX, as well as “unprecedented environmental pollution”.
All the cited negatives will inevitably lead to Bitcoin & Co. “disappearing into insignificance”.
This position of the ECB vis-à-vis cryptocurrencies is not new. Former board member Yves Mersch has publicly called bitcoin “a combination of a bubble, a pyramid scheme and an environmental disaster.” From his point of view, the financial sector must be protected from the negative influence of this branch. In case of doubt, by “resolute measures of partitioning”.
Benoît Cœuré, also a former member of the ECB’s Executive Board, said: “Hardly anyone touts the merits of bitcoin commodities, few use it to make payments, and as a store of value it’s no better than bitcoin. ‘a game of chance in a casino’.
With this latest blog post, the ECB shows that its views on the cryptomarket have not changed from statements made by executive board members in 2018.
Bitcoin price technical benchmarks
Bitcoin is currently recording, at one at $17,084, it gained 1.18%, while it was up 2.44% on a weekly basis.
The cryptocurrency managed to hit a daily closing price above the 23.6 percent Fibo retracement of $16,986 yesterday. This opened the door for an extension of the upward correction towards the 38.2 percent Fibo retracement of $17,841. Beyond that, the next resistances are at the 50% Fibo retracement of $18,533 followed by the 61.8% Fibo retracement at $19,225.
If the 23.6% Fibo retracement cannot be defended as daily close support, losses are again possible towards the November 21 low, which sits at $15,504.
By Marco Oehrl