Bank of England calls Bitcoin ‘worthless’ as UK inflation hits 10-year high

December 15, 2021

Darko Simunovski content is written in English. Translations into other languages are automated and there may be minor text errors.

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Anyone who invests in it should be prepared to lose their entire investment. The post concludes by stating that while the Bank is keeping a close eye on developments in the crypto-currency market, it is too early to say whether or not the Bank of England will issue a similar warning about Bitcoin. Bitcoin’s Inherent Volatility Could Send Shock Waves Through Global Markets – Investopedia Central Banks around the world are getting ready to tighten monetary policy, but one of the most powerful institutions on earth is taking no chances when it comes to the global economy. On Friday, December 10, the Bank of England released its much anticipated quarterly inflation report for the three months ending September 30, showing that prices in the U.K. rose at the fastest pace since January of last year. The Consumer Price Index increased by 2.1% in the year to November, up from 3.2% in October, which was the highest rise in a decade and more than twice the central Bank’s prediction. Economic forecasters surveyed by Reuters had predicted inflation would reach 4.7% in November, while the Bank of England had forecast that inflation would reach 5% in the spring of 2022 before easing to its 2% goal by late 2023.

Monetary Policy Committee members meet on Thursday, December 16, to discuss whether to tighten monetary policy, with inflation rising and the labor market remaining strong, but the fast spread of Omicron Covid-19 has placed further doubt on the short-term prospects for economic growth. Ultimately, with record inflation levels in both the United States and the U.K., the current economic situation has prompted investors to consider Bitcoin and other assets as a means of protecting themselves against inflation.

Bank of England concludes that Bitcoin is more likely to fail than succeed.

On Tuesday, December 14, a member of the Bank’s staff wrote in a blog post published on its website entitled “What is a Bitcoin worth?” saying that Bitcoin does not meet many of the requirements necessary for a currency and that it is intrinsically volatile.

Thomas Belsham, wrote the following: “Only 21 million Bitcoin will ever be created. And that might be worth something. That scarcity is why some people refer to Bitcoin as ‘digital gold’. But the very scarcity on which Bitcoin is based might also be its undoing. Its scarcity may even, ultimately, render Bitcoin worthless.”

He also added: “Simple game theory tells us that a process of backward induction should, really, at some point, induce the smart money to get out. And were that to happen, investors really should be prepared to lose everything. Eventually.”

The facts are showing opposite to what some central banks authorities are publicly stating. Actually the price of Bitcoin in the beginning of this year was 29 thousand dollars and now (at the time of writing) is 47 thousand dollars which is 62% increase, while on the other hand inflation is lowering the purchase power, which leads to lowering the standard of living.

BTC price chart 2021 source: Messari

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