Deutsche Bank analysts argue that the value of Bitcoin was based on fictitious thinking shortly after the price of the cryptocurrency fell.
Marion Labouré from Deutsche Bank,
What is true for glamor and style may also be true for Bitcoin. Just as a fashion imitation can happen suddenly, we have evidence that digital currencies can quickly become obsolete.
Deutsche Bank comments came right after Bitcoin’s massive price drop earlier this week. Bitcoin, currently priced at $ 40,900, has dropped 17% weekly and 27% over the past two weeks.
Two major events have been linked to the decline of Bitcoin. First, Elon Musk’s shocking Bitcoin U-turn tweeted on May 12 that Tesla stopped accepting Bitcoin as a payment due to concerns over the environmental impact of the cryptocurrency.
We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and operations, especially we need to get rid of coal, which has the worst emissions.
Second, less than a week later, three Chinese payment associations supported the country’s ban on crypto transactions by financial institutions.
Three industrial organizations said in a statement on May 18,
Recently, cryptocurrency prices have skyrocketed and dropped, and speculative trading of cryptocurrency has returned, seriously violating the security of people’s properties and disrupting the normal economic and financial order.
But the Deutsche Bank note sparks a debate over whether Bitcoin is initially valuable in nature.
Bitcoin and its real value
The question about the true value of bitcoin usually arises when the price of the cryptocurrency goes down.
They argue that the price of Bitcoin has been the result of over a decade of intensive proof-of-work mining and is a testament to a censorship-resistant, fully decentralized, always-open payment network. Critics argue that Bitcoin is a huge waste of energy and the market is run by highly dubious companies.
Either way, since the world’s largest fiat currencies left the gold standard, the only true source of value for fiat currencies comes from consumer trust, just like Bitcoin. If Bitcoins are defined by one thing, it is their trust in their favorite cryptocurrency.