In a blog post published by the European Central Bank, Ulrich Bindseil, director general of market infrastructure and payments and Jürgen Schaaf, an advisor to the central bank, bill the vurrent turmoil in the crypto markets as "bitcoin’s last stand".

The value of bitcoin peaked at $69,000 in November 2021 before falling to $17,000 by mid-June 2022. Since then, the value has fluctuated around $20,000.

"For bitcoin proponents, the seeming stabilisation signals a breather on the way to new heights," they write. "More likely, however, it is an artificially induced last gasp before the road to irrelevance - and this was already foreseeable before FTX went bust and sent the bitcoin price to well below $16,000."

In the mid-2010s, the hope that bitcoin’s value would inevitably rise to ever new heights began to dominate the narrative. But bitcoin is neither suitable as an investment or even as a real-world means of payments, the blog argues.

"Speculative bubbles rely on new money flowing in. Bitcoin has also repeatedly benefited from waves of new investors," the blog continues, pointing out that big bitcoin investors have the strongest incentives to keep the euphoria going and have hired armies of lobbyists to push their case with lawmakers and regulators.

This activity has led lawmakers to sometimes facilitate the influx of funds by supporting the supposed merits of bitcoin and offering regulation that gave the impression that crypto assets are just another asset class.

"The current regulation of cryptocurrencies is partly shaped by misconceptions," the authors state. "The belief that space must be given to innovation at all costs stubbornly persists. Since bitcoin is based on a new technology - DLT / blockchain - it would have a high transformation potential. Firstly, these technologies have so far created limited value for society - no matter how great the expectations for the future. Secondly, the use of a promising technology is not a sufficient condition for an added value of a product based on it."

The supposed sanction of regulation has also tempted the conventional financial industry to make it easier for customers to access bitcoin, the blog continues. "The entry of financial institutions suggests to small investors that investments in bitcoin are sound."

"Since Bitcoin appears to be neither suitable as a payment system nor as a form of investment, it should be treated as neither in regulatory terms and thus should not be legitimised," the blog concludes. "Similarly, the financial industry should be wary of the long-term damage of promoting bitcoin investments - despite short-term profits they could make (even without their skin in the game). The negative impact on customer relations and the reputational damage to the entire industry could be enormous once bitcoin investors will have made further losses."