All the excitement around last month’s regulatory approval of multiple spot bitcoin (BTC-USD) exchange-traded funds “doesn’t change the fact that Bitcoin is not suitable as means of payment or as an investment,” two staff members at the European Central Bank wrote in a recent blog post.

Then “why is this dead cat bouncing so high?” ECB Director General for Market Infrastructure and Payments Ulrich Bindseil and Advisor Jürgen Schaaf asked, referencing the crypto market’s ETF-induced rally, which took a breather this past week.

Year-to-date, bitcoin (BTC-USD) climbed 16.5% from $44.9K on Jan. 1, having consolidated in the narrow $51.6K-$52.2K range since mid-February. The token surged 113% from a year ago, a move supported by bullish bets leading up to the Securities and Exchange Commission’s spot ETF approval, coupled with the Federal Reserve’s dovish pivot late last year.

The ETF approval opened the floodgates to retail investors and Wall Street for bitcoin (BTC-USD), with billions of dollars pouring into such products in the less than two months since they have been live. But the ECB officials argued that the ETFs don’t directly make bitcoin (BTC-USD) more valuable, but, instead, give market participants another way to speculate on the token without any intermediation.

“The problem has never been a lack of possibilities to speculate using Bitcoin – but rather that it is only about speculation,” they said. In all, the authors contended that bitcoin (BTC-USD) is mired in a speculative bubble, reiterating that “the fair value of bitcoin is still zero.”

ETFs that invest directly in bitcoin (BTC-USD) include: (GBTC) (EZBC) (IBIT) (BRRR) (BTCO) (BTCW) (FBTC) (ARKB) (BITB).

The European Union, meanwhile, has been a key player in crypto regulation, having implemented last year a comprehensive regulatory framework for digital assets and crypto service providers. What’s more, the ECB has been focused on developing a central bank-issued digital euro to offer a secure substitute for private crypto.

“The ongoing manipulation of the ‘price’ in an unregulated market without oversight and without fair value, the growing demand for the ‘currency of crime,’ and shortcomings in the authorities’ judgments and measures” are the three structural reasons for the recent crypto rally, the blog said.

The average SA analyst has been bullish on bitcoin (BTC-USD) since Nov. 21, 2023, and some recommend buying the token ahead of the halving. The event, which is expected to take place in mid-April, occurs when the block reward given to BTC miners for processing transactions is slashed in half, effectively reducing the number of new bitcoins coming to market. History shows that the price of BTC has climbed following many halving events, which occurs roughly every four years. On Wednesday, SA analyst Nicholas Kitonyi took a neutral stance on the highly-anticipated event, laying out reasons for buying – or not buying – BTC ahead of the halving.