Luis de Guindos, vice president of the European Central Bank, has dismissed the value proposition of cryptocurrencies as investment assets.
Speaking to Bloomberg TV, the ECB vice president remarked that crypto should not be seen as a real investment. “When you have difficulties to find out what are the real fundamentals of an investment, then what you’re doing is not a real investment,” de Guindos argued, adding:
“This is an asset with very weak fundamentals, and that is going to be subject to a lot of volatility.”
According to de Guindos, the current market drawdown is not different from the explosive surge recorded between quarter four of 2020 and quarter one of 2021. Indeed, the ECB executive opined that the present decline is symptomatic of the volatility of the cryptocurrency market.
Earlier in May, Bank of England Governor Andrew Bailey warned that crypto investors were liable to lose their money. While de Guindos’s argument on Wednesday hinged on weak fundamentals and volatility, Bailey contended that crypto lacked intrinsic value during a conference held earlier in the month.
Indeed, crypto prices have been on the decline in the last week, with Bitcoin (BTC) shedding over $15,000 from its price. In all, the market has lost over $750 billion, with about half of the slump occurring in the last 24-hour trading period.
The current decline has seen the percent of unique Bitcoin entities in profit slide to its lowest level since the Black Thursday crash of 2020.
Bitcoin has rebounded on the three previous occasions when this metric fell amid a significant bullish advance, and crypto proponents will most likely be hopeful of a repeat in this regard.
Meanwhile, record Bitcoin inflows are hitting crypto exchanges, with data from crypto on-chain monitoring service Glassnode indicating that newer entrants are responsible for the bulk of the selling pressure.