Bank of Canada calls bitcoin rally a ‘speculative mania’

Timothy Lane, deputy governor of the Bank of Canada, called the bitcoin bull run speculative. He said that cryptocurrencies are suitable only for ‘illicit activities’.

“The recent surge in the prices of digital assets looks not like a trend but like a speculative mania. Even in an increasingly digital economy there is no reason for cryptocurrencies such as bitcoin to become the money of the future,” Lane added.

According to him, digital assets are suitable only for illicit activity, where “anonymity outruns all other functions”. Lane noted high transaction fees and the unstable purchasing power of cryptocurrencies.

The executive said that the hype around bitcoin’s price is nothing more than speculation, because “one loud tweet is enough to trigger a sudden spike in the price”.

On February 8, Tesla invested $1.5 billion in bitcoin, after which the asset’s price began to rise sharply and in less than a day surpassed the $48,000 mark. At the time of writing, the first cryptocurrency was trading at around $44,400.

Former head of the Office of the Comptroller of the Currency (OCC) within the U.S. Treasury Brian Brooks described Tesla’s investments in bitcoin as both exhilarating and alarming.

Former Goldman Sachs investment director Gary Black sold the shares of the electric-car maker after the company shifted part of its reserves into digital gold.

Earlier, former Canadian prime minister Stephen Harper acknowledged the possibility of a clash between bitcoin and the dollar for reserve-currency status.

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