The future of Bitcoin has become a topic of deliberation in recent weeks. The first-generation cryptocurrency has fallen more than 70 percent from its November 2021 all-time high of $69,000. Since then, Bitcoin has struggled to regain its lost footing and even dipped below the $18,000-mark earlier this month. Through the turmoil, the legacy coin has attracted mixed reactions from authorities across the world.
Economic Daily, a newspaper run directly under the purview of the Chinese Communist Party, published an article last week warning against Bitcoin investments. Beijing believes that BTC prices would be "heading to zero" and is therefore dissuading investors from parking money in Bitcoin.
"Bitcoin is nothing more than a string of digital codes, and its returns mainly come from buying low and selling high," the article read. "In the future, once investors' confidence collapses or when sovereign countries declare bitcoin illegal, it will return to its original value, which is utterly worthless," it further declared.
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China has been a vocal antagonist of cryptocurrencies since 2013 when it notoriously banned all banks from setting foot in Bitcoin trading activities. In 2017, China also pulled the plug on fundraising activities that backed crypto projects, forcing millions of investors to reroute their money to overseas crypto markets. Soon after, in 2018, Beijing came down on all crypto exchanges operating within its borders.
In May 2021, the Chinese Financial Stability and Development Committee declared its stance against Bitcoin mining operations. It said that it would unflinchingly "crackdown on bitcoin mining and trading behaviour and resolutely prevent the transfer of individual risks to society".
Meanwhile, Nayib Bukele, the President of El Salvador, remains bullish on Bitcoin. On June 19, 2022, President Bukele took to Twitter to alleviate the concerns among panicking investors and assured them of Bitcoin's reliability. "My advice: stop looking at the graph and enjoy life. If you invested in #BTC your investment is safe, and its value will immensely grow after the bear market," he wrote.
El Salvador became the first country to adopt Bitcoin as a legal tender in September 2021. Since then, the South American nation has pumped $104 million into Bitcoin, filling its treasury with 2,301 BTC at an average price of $45,171.
Bitcoin is presently trading at $21,190, making the El Salvadorean treasury worth $48.76 million — only 47 percent of its initially invested amount. Nonetheless, Finance Minister Alejandro Zelaya has said that it does not count as a loss "because we have not sold the coins."
The Bank of England (BoE) is also beginning to see the benefits of accumulating Bitcoin through the tumultuous crypto winter. Last week, Sir Jon Cunliffe, Deputy Governor of the BoE, told Bloomberg that the crypto firms surviving the ongoing meltdown would emerge victorious as the "dominant players" who would lead the next wave of change.
"Whatever happens over the next few months to crypto assets, I expect crypto technology and finance to continue. It has the possibility of huge efficiencies and changes in market structure," said Cunliffe to Bloomberg.
However, this is in stark contrast with its December 2021 stance on cryptocurrencies. At the time, the BoE Deputy Governor had called the digital asset class a threat to existing traditional financial systems. "The point, I think, at which one worries is when it becomes integrated into the financial system when a big price correction could really affect other markets and affect established financial market players," Cunliffe told the BBC. "It's not there yet, but it takes time to design standards and regulations," he had added.
Opinions on Bitcoin continue to fluctuate as the world's oldest cryptocurrency tests new levels as it faces more headwinds. The US inflation is still the greatest threat to the first-generation crypto and where it goes from here is still quite uncertain.
