- The ECB published a paper claiming that a $10 million per Bitcoin rate is plausible.
- The Eurozone central bank warned about early BTC holders greatly profiting at the expense of new holders.
- The institution called for a legislative cap or outright ban on the crypto asset as its exponential growth could lead to problems in the ensuing wealth redistribution.
Bitcoin (BTC) is currently edging closer to its all-time high of $73K. With that, it has come under the cross-hairs of regulators, individual investors, and financial institutions once more. To this effect, the European Central Bank (ECB) posted a paper on October 12 centering on its latest insights on the digital asset, including specific concerns regarding its distribution.
The ECB’s document titled “The distributional consequences of Bitcoin” recently painted the premier crypto asset both in a positive and negative light. It is still under the Social Science Research Network’s (SSRN) review, but it has garnered a significant amount of attention due to its bold predictions and proposed BTC ban.
A copy of the paper on the SSRN portal revealed that it was authored by ECB’s Ulrich Bindseil, Director General of Market Infrastructure & Payments, and Jürgen Schaaf, adviser on financial economics.
ECB’s $10M Projection for Bitcoin
Forget Jan3 CEO Samson Mow and Ark Invest CEO Cathie Wood’s mind-blowing $1 million per BTC forecasts between 2025 and 2030. The ECB just claimed in its report, “Any price for Bitcoin is equally plausible, including 10 million or more.”
However, the loathing of the Eurozone central bank definitely resonated on its justification for its ginormous valuation. It reminded, “As none of these prices has any particular economic justification or imputed basis.”
Recalling Robert Kennedy Jr’s speech at the recent Nashville Bitcoin conference, the ECB pointed out that such a scenario would mean BTC’s market capitalization reflecting way beyond its equity and overall gold reserves held by central banks in the world combined. As of August 2024, the total market of gold was around $12.2 trillion.
A Warning for Late Adopters of BTC
The ECB raised a caveat in case Bitcoin undergoes an exponential climb. It said that its ensuing redistribution of wealth would prove to be quite problematic.
The financial institution criticized that older Bitcoin holders could only profit at the expense of new holders. For short, it’s basically poking at how capital markets actually work.
As a result, it urged non-holders of the crypto asset to oppose Bitcoin. In addition, it encouraged them to pressure their lawmakers to push for legislation countering BTC’s potential dominance in financial markets by either capping its price or banning it altogether.
Moreover, the ECB emphasized that Bitcoin’s limited or finite supply does not automatically equate with its scarcity. The non-economic term “rarity” would be a more fitting term to describe it based on the paper.
“If supply is fixed, the price becomes exclusively dependent on demand,” the ECB stated. “And if the demand were to disappear, the price would be zero.”
Furthermore, the ECB noted that Bitcoin lacks an intrinsic anchor of value. This echoes the general sentiment of BTC’s critics, which has time and again been proven wrong by the crypto asset’s rising institutional adoption and utility, especially for the unbanked.
