Crypto Alerts: Despite an audacious plan to boost the bitcoin price, the price of bitcoin and cryptocurrencies fell sharply this week.
The bitcoin price has dropped around 10% in the last week, with Ethereum, Cardano, Binance’s BNB, Ripple’s XRP, and the meme-based dogecoin experiencing even steeper drops, despite the fact that El Salvador previously adopted bitcoin as legal tender and banking giant Standard Chartered predicted the bitcoin and Ethereum price could be about to explode.
The price of bitcoin rose throughout August, but heavy selling wiped out more than $300 billion from the combined value of the world’s largest cryptocurrencies this week.
“Private money usually collapses sooner or later,” said Riksbank governor Stefan Ingves at a banking conference in Stockholm, according to Bloomberg. “And, yes, trading in bitcoin can make you rich, but it’s comparable to trading in stamps.”
Meanwhile, Bank of Mexico governor Alejandro Diaz de Leon described bitcoin as an “evolved” barter rather than “evolved” fiat money, describing it as a high-risk investment and a poor store of value due to its wild price swings.
The bitcoin price has increased by a massive 350% in the last year, but investors have needed strong stomachs—bitcoin dropped by nearly 20% on Tuesday alone before rebounding. Since January, the overall cryptocurrency market has increased by around 170 per cent, with much of that coming from gains in Ethereum, Cardano, Solana, BNB, XRP, and dogecoin.
“Whoever receives bitcoin in exchange for a good or service, we believe that is more akin to bartering because that person is exchanging a good for a good, but not really money for a good,” Diaz de Leon said, casting doubt on suggestions that Mexico could follow El Salvador in adopting bitcoin as an official currency.
“People do not want their purchasing power or salary to fluctuate by 10% from one day to the next. You don’t want that kind of volatility in your purchasing power. In that sense, it is not a good value safeguard.”
The price of bitcoin has skyrocketed in the last year, but it has recently stalled, even as the prices of Ethereum, Cardano, Solana, Binance’s BNB, Ripple’s XRP, and dogecoin have skyrocketed.
The dual central banker warning comes after analysts at banking behemoth JPMorgan JPM warned of “froth and retail investor mania” coursing through the crypto market, singling out buzzy Ethereum rivals Solana, Binance’s BNB, and Cardano as particularly vulnerable to a sell-off.
“The previous phase of retail investors’ mania into cryptocurrency markets was between the beginning of January and mid-May… and retail investors are making cryptocurrency markets look frothy again,” wrote JPMorgan researchers led by managing director Nikolaos Panigirtzoglou.