The Bank of England has issued a warning saying bitcoin could become “worthless”, and people investing in the cryptocurrency could lose everything.
‘Their price can vary quite considerably and [Bitcoins] could theoretically or practically drop to zero,’ said Sir Jon Cunliffe, deputy governor of Bank of England.
Bitcoin hit a lifetime high of $68,990.90 per token last month, but the token dropped below the $50,000 per token mark early in December’s trading and now trades at roughly $46,300 per coin. The cryptocurrency is down roughly 23% over the last month and approximately 33% from its high.
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Following a day of sell-offs on Friday, the cryptocurrency market is posting some recovery momentum on Saturday. Bitcoin was up roughly 3.3% from the stock market’s closing bell on Friday. Meanwhile, Ethereum and Dogecoin’s tokens were up roughly 6.4% and 6%, respectively, over the same period.
In a separate blog post published on its website on Tuesday, one of the staff member of the Bank of England wrote that bitcoin failed to fulfil many of the features required of a currency and that it risked being inherently volatile.
“The problem is that, unlike traditional forms of money, bitcoin isn’t used to price things other than itself,” Thomas Belsham, who works in the bank’s stakeholder and media engagement division, wrote.
“As bitcoiners themselves are fond of saying, ‘one bitcoin = one bitcoin’. But a tautology does not a currency make.” He added, the scarcity of bitcoin – which has been capped at 21 million – was one of the main attractors for investors.