ECB Claims $10M Bitcoin Possible, Advocates for Its Ban

• The ECB released a paper asserting that a $10 million value per Bitcoin is conceivable.
• The Eurozone central bank cautioned that early Bitcoin holders could significantly benefit at the cost of newer investors.
• The organization advocated for either a legislative cap or a complete ban on the cryptocurrency, as its rapid growth might trigger issues in wealth redistribution.

Bitcoin (BTC) is currently approaching its all-time high of $73K. With this resurgence, it has once again attracted the attention of regulators, individual investors, and financial institutions. In this context, the European Central Bank (ECB) issued a paper on October 12 focusing on its latest observations regarding the digital asset, specifically addressing concerns about its distribution.

The ECB’s report, titled “The distributional consequences of Bitcoin,” has examined the leading cryptocurrency from both positive and negative perspectives. While it remains under review by the Social Science Research Network (SSRN), it has attracted considerable interest due to its bold forecasts and the suggested BTC ban.

A link to the paper on the SSRN platform shows that it was co-authored by Ulrich Bindseil, Director General of Market Infrastructure & Payments, and Jürgen Schaaf, an adviser on financial economics at the ECB.

ECB’s $10M Projection for Bitcoin

Forget the jaw-dropping $1 million per BTC estimates from Jan3 CEO Samson Mow and Ark Invest CEO Cathie Wood for the years 2025 to 2030. The ECB has now stated in its report, “Any price for Bitcoin is equally plausible, including 10 million or more.”

However, the Eurozone central bank’s disdain for this massive valuation was evident in its rationale. It noted, “As none of these prices has any particular economic justification or imputed basis.”

Referring to Robert Kennedy Jr’s comments from the recent Nashville Bitcoin conference, the ECB highlighted that achieving such a valuation would mean BTC’s market capitalization far exceeds the combined equity and gold reserves held by central banks globally. As of August 2024, the total gold market was approximately $12.2 trillion.

A Warning for Late Adopters of BTC

The ECB issued a warning regarding the potential for Bitcoin to experience exponential growth, suggesting that it could create significant wealth redistribution issues.

The financial institution criticized the notion that early Bitcoin adopters could profit at the expense of newer holders, essentially pointing out how capital markets function.

Consequently, it urged individuals who do not own the cryptocurrency to oppose Bitcoin. Additionally, it encouraged them to press their lawmakers to promote legislation that would counter Bitcoin’s possible dominance in financial markets through price caps or outright bans.

Moreover, the ECB stressed that Bitcoin’s fixed supply does not inherently imply its scarcity. According to the paper, the term “rarity” would be a more appropriate descriptor.

“If supply is fixed, the price becomes exclusively dependent on demand,” the ECB remarked. “And if the demand were to vanish, the price would be zero.”

Furthermore, the ECB observed that Bitcoin lacks intrinsic value. This aligns with the common perspective of BTC’s critics, though this view has repeatedly been challenged by the crypto asset’s growing institutional acceptance and utility, particularly for individuals without bank access.