European Central Bank’s (ECB) vice president Luis de Guindos says crypto investments have “weak fundamentals” and are not real assets, as the market loses $750 billion.
As the cryptocurrency market rides out another massive crash, some are not surprised by the losses. VP of the European Central Bank, Guindos, is one of those individuals. Speaking with Blomberg TV, Guindos says that digital currency should not be viewed as a viable asset.
“When you have difficulties finding out what are the real fundamentals of an investment, then what you’re doing is not a real investment,” Guindos states. “This is an asset with very weak fundamentals, and that is going to be subject to a lot of volatility.”
According to Spain’s former Minister of Economy, Industry, and Competitiveness, the current market dip is no different from the surges experienced between the fourth quarter of 2020 and now. Guindos believes the current decline is symptomatic of the extreme volatility that exists in the crypto market.
In their Financial Stability Review, the ECB said the risks posed by bitcoin (BTC) to the overall system of finance appear limited despite surges in prices. The price surge “eclipsed previous financial bubbles like the ‘tulip mania’ and the South Sea Bubble in the 1600s and 1700s.”
The report added that “the situation we had some months ago, when prices were rocketing, is not very different to the one that we have now when prices are moving down.”
For those living under a massive rock, the value of bitcoin and other digital currencies has fallen off a cliff, this week. The drop is being attributed partially to criticism by Tesla mastermind and crypto celebrity, Elon Musk. Since his ill-fated appearance on Saturday Night Live, the whole crypto industry has seen a slide in positivity and price. Additionally, greater regulatory scrutiny is apparently scaring off many current and would-be investors from crypto.
The current decline has seen the percent of unique BTC entities in the black slide to its worst level since the “Black Thursday” crash, last year. In each of the previous three crashes, bitcoin has rebounded and crypto supports will likely be praying for a repeat performance after the most recent dive in prices.