Crypto should not be seen as a real investment. “When you have difficulties to find out what are the real fundamentals of an investment, then what you’re doing is not a real investment,” according to the ECB vice president, Luis de Guindos in an interview with Bloomberg.
Luis de Guindos further opined that it is subject to volatility and it is an asset with very weak fundamentals.
The recent market drawdown is not different from the explosive surge recorded between quarter four of 2020 and quarter one of 2021, according to de Guindos. Also, the present decline is symptomatic of the volatility of the cryptocurrency market
Earlier in May, Bank of England Governor Andrew Bailey warned that crypto investors were liable to lose their money. While de Guindos’s argument on Wednesday hinged on weak fundamentals and volatility, Bailey contended that crypto lacked intrinsic value during a conference held earlier in the month.
Indeed, crypto prices have been on the decline in the last week, with Bitcoin (BTC) shedding over $15,000 from its price. In all, the market has lost over $750 billion, with about half of the slump occurring in the last 24-hour trading period.
The current decline has seen the percent of unique Bitcoin entities in profit slide to its lowest level since the Black Thursday crash of 2020.