European Central Bank claims that early Bitcoin investors are exploiting new buyers

According to a recent paper by the European Central Bank (ECB), early Bitcoin investors are allegedly profiting by taking advantage of new entrants to the market.

The paper claims that due to Bitcoin’s decentralized and limited supply structure, those who bought in earlier or at lower prices are cashing out for a profit, effectively exploiting new buyers.

The author goes as far as to suggest that Bitcoin should either face strict price controls or be completely banned to prevent what they call an ‘unfair’ transfer of wealth.

Bitcoin wealth distribution could cause social unrest

The paper argues that Bitcoin’s concentrated wealth distribution could lead to social unrest.

“Those who don’t currently own Bitcoin should realize they have strong reasons to oppose it and should support legislation to prevent Bitcoin prices from rising or stop Bitcoin from disappearing completely,” it warns.

The ECB report also cites previous studies highlighting Bitcoin’s frequent use in illegal activities, raising concerns about its role in criminal operations.

However, this view was contradicted by a U.S. Treasury report in May 2024, which pointed out that traditional fiat currencies, not cryptocurrencies like Bitcoin, remain the most common means for illicit activities.

Interestingly, the ECB report does not address why Bitcoin’s value has surged since its launch in 2009.

Nor does it acknowledge that Bitcoin’s anonymous founder, Satoshi Nakamoto, designed the asset as a decentralized payment system and a hedge against fiat currency devaluation.

Given Bitcoin’s capped supply of 21 million coins, scarcity has been a key driver of its price increases—especially as governments worldwide have continued to expand their monetary supply.

European Central Bank report does not address the context of monetary inflation

Critics of the ECB’s stance argue that the report fails to consider the broader context of currency inflation.

For instance, the UK’s public sector debt reached nearly 98% of GDP in 2023-2024, hitting its highest level since the 1960s.

In the U.S., the M2 money supply increased by 41% since 2020, pushing the national debt to a whopping $35 trillion.

The report’s contradictory claim that Bitcoin lacks intrinsic value but poses an unstable threat ignores the fact that Bitcoin was designed as a response to inflationary pressures.

As traditional currencies continue to lose purchasing power, Bitcoin remains attractive to institutional and individual investors as a store of value.

Speaking of growing interest, both retail and institutional investors are increasingly drawn to Bitcoin and related products.

A recent survey commissioned by financial services giant Charles Schwab revealed a rising interest among U.S. investors in ETFs holding cryptocurrencies.

According to the survey, 45% of respondents plan to invest in crypto through ETFs next year, up from 38% the previous year.

Interest in cryptocurrencies has now outpaced demand for bonds and alternative assets, with only 55% of respondents expressing plans to invest in U.S. stocks, which remains the top choice.

Millennial ETF investors are particularly enthusiastic, with 62% planning to allocate funds to cryptocurrencies—significantly higher than the 48% for U.S. stocks, 47% for bonds, and 46% for physical assets like commodities.