Bitcoin could collapse and isn’t ‘a good safeguard of value,’ warn global central bankers – MarketWatch

Its a historic week for bitcoin, but that hasnt stopped global central bankers from issuing a round of warnings about the utility and inherent volatility of crypto assets.

RiksbankGov. Stefan Ingves said that doubts remain about the staying power of bitcoin BTCUSD, -0.19%, the worlds most prominent digital asset, if it isnt government backed.

Private money usually collapses sooner or later, Ingves said at a banking conference in Stockholm recently.

The central banker said that regulatory scrutiny on crypto, including bitcoin and Ether ETHUSD, -1.02% trading on the Ethereum blockchain, will likely increase as the popularity of digital assets grows.

Meanwhile, Bank of Mexico Gov. Alejandro Diaz de Leon on Thursday separately said that bitcoin is a tool for barter rather than legal tender and described it as a poor store of value, citing its wild price swings.

Whoever receives bitcoin in exchange for a good or service, we believe that is more akin to bartering because that person is exchanging a good for a good, but not really money for a good, Reuters quoted Diaz de Leon as saying.

People will not want their purchasing power, their salary to go up or down 10% from one day to another. You dont want that volatility for purchasing power. In that sense, it is not a good safeguard of value, the Mexican central banker said.

His comments come after bitcoin formally became legal tender in El Salvador, which has been viewed by many enthusiasts as a watershed moment for crypto.

Read: El Salvadors bitcoin experiment splits crypto community amid major price decline

Check out: Bitcoin Day in El Salvador ushers in the promise and peril of crypto

However, that moment failed to dull the choppy trade that has come to be associated with bitcoin and its ilk.

Bitcoin hit a near-term peak of $53,000 on Monday but preceded to tumble to an intrasession nadir on Tuesday at around $43,000, according to CoinDesk.

Diaz de Leonsaid that Mexico wouldnt be seeking to adopt crypto similar to El Salvador, given what he described as its flaws.

On Thursday, bitcoin was changing hands at $46,696.80 on CoinDesk, up 0.9% but well off its recent peak, while Ether was trading at $3,471.13, down 1.1%.

Stocks were also trading under pressure, with the Dow Jones Industrial Average DJIA, -0.43%, the S&P 500 SPX, -0.46% and the Nasdaq Composite indexes COMP, -0.25% all ending lower.

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Bitcoin could collapse and isn't 'a good safeguard of value,' warn global central bankers - MarketWatch