"ECB Adviser Dismisses Bitcoin as Euro Stabilizer, Price Plummets"

An adviser to the European Central Bank (ECB) has expressed skepticism about the idea of national Bitcoin reserves, arguing that the cryptocurrency lacks economic necessity and relevant usage compared to traditional reserves like oil and gas. Jürgen Schaaf, an ECB adviser, dismissed the notion that Bitcoin could stabilize the euro or provide significant benefits to financial institutions, instead warning that it would encourage speculation and wealth redistribution.

Schaaf's comments align with ECB President Christine Lagarde's stance against Bitcoin in central bank reserves. He criticized the extreme volatility, illicit use, and susceptibility to manipulation of Bitcoin, making it unsuitable for central banks. Schaaf also ruled out the idea of central banks holding diversified crypto asset reserves, stating that adding multiple cryptocurrencies would only amplify concerns about volatility and speculative exposure.

Meanwhile, Bitcoin's recent price drop below $90,000 triggered a sell-off in US spot ETFs and sent Strategy's stock plummeting, raising concerns about the sustainability of its aggressive Bitcoin accumulation strategy. Despite the volatility, analysts remain optimistic about Strategy's long-term prospects. GameStop received a proposal from Strive Asset Management urging it to allocate its cash reserves into Bitcoin.

Schaaf's remarks come at a time of turbulence in the crypto markets, with $1.5 billion in liquidations recorded over the past 24 hours. Bitcoin also saw a sharp decline, dropping below $88,000 for the first time since mid-November. Despite the ECB's skepticism, some Bitcoin advocates argue that the crypto could play a role in managing national debt. Asset management firm VanEck suggested in December that the US could reduce its national debt by 35% over the next 24 years if it created a reserve of one million BTC.

Just how volatile Bitcoin can be was brought to light by the latest market downturn. Shares of Strategy declined by close to 16% since the start of the year, thanks to Bitcoin's ongoing market correction. The drop in the company's stock price reignited concerns about the sustainability of its aggressive Bitcoin acquisition strategy. Analysts warned that if the company's liabilities were to surpass its assets significantly, its ability to secure more funding could be jeopardized.

Despite these concerns, stock analysts are still optimistic about Strategy's potential for a recovery. On Feb. 6, analysts at Benchmark raised the company's