The vice president of the European Central Bank (ECB) has said that investors are taking a ‘risk’ by buying bitcoin at its high price.
Speaking to CNBC on Wednesday, Vitor Constancio, said:
It’s a very particular asset, it’s a speculative asset by definition looking to the developments in its price. Investors are taking that risk of buying at such high prices.
Constancio’s comments come at a time when the digital currency is experiencing a surge in value. Earlier today, it was reported that bitcoin had risen to over $11,000 along with a rise in various alt-coin prices. To date, the cryptocurrency has increased by over 1,000 percent, a colossal undertaking considering it was trading at $1,000 at the beginning of the year, and has overcome numerous obstacles.
Some, though, are still expecting great things from bitcoin. Mike Novogratz, a billionaire investor and hedge fund manager, believes that it could ‘easily’ rise to $40,000 by the end of 2018. However, at a recent conference in New York, he stated that it wouldn’t be easy getting there, adding:
There will be wild crashes in it because you’re going to get to levels so far ahead of where the technology’s at.
Central banks, though, have continually been reluctant to embrace the market. The ECB vice president said earlier this month that digital currencies will never replace the fiat system, adding that they were a ‘misnomer‘ merely used as a speculative asset.
At the time, he stated:
The so-called private ‘cryptocurrencies’ can never prevail as general money substitutes.
Mario Draghi, the ECB President, has also spoken about the digital currency market, claiming that they aren’t ‘mature‘ enough for the central bank to consider regulating them. More recently, Draghi stated that they pose little threat to the central bank-dependent financial system, despite the rise in the cryptocurrency market.
Not only that, but Constancio believes that central banks don’t need to take the digital currency market seriously. During the interview, he said:
…in the sense that we don’t have responsibility or even instruments that point to particular prices of particular assets, that is certainly not the role of central banks.
Yet, regardless of the fact that the crypto market, in particular bitcoin, have been criticised by various financial CEOs, it looks as though it has its foot firmly in the door and isn’t going away anytime soon. Not only that, but we may soon be reading headlines that the combined crypto market has become more valuable than JPMorgans.