Bitcoin plunges as banque de France governor warns risks are materializing

Friday 06 - 12:00

By: Sahili Aya

Bitcoin plunges as banque de France governor warns risks are materializing

Bitcoin experienced a sharp decline on Friday, falling to $60,000 for the first time in sixteen months, raising concerns about volatility in the cryptocurrency market. François Villeroy de Galhau, governor of the Banque de France, stated that the recent drop shows that “the risks are materializing,” though he emphasized that this does not pose a systemic threat to the financial system.

Speaking to BFM Business, Villeroy de Galhau reiterated that Bitcoin has always been “a highly volatile and risky asset.” He stressed that investors should approach the cryptocurrency with caution and accept the risks involved, countering previous claims portraying it as a risk-free, high-return investment.

The governor also criticized overly optimistic narratives suggesting Bitcoin could replace traditional currencies, describing such claims as unrealistic. “This demonstrates that no investment can offer both high returns and no risk,” he said.

Beyond cryptocurrency, Villeroy de Galhau commented on the broader European economic landscape. Following the European Central Bank’s decision to maintain interest rates, he noted that inflation in the eurozone stood at 1.7% in January year-on-year, below the ECB target of 2%. He also highlighted France’s low inflation (+0.3% nationally) as an opportunity for increased purchasing power and wage moderation, supporting national competitiveness.

Villeroy de Galhau warned of a deflationary effect caused by a significant increase in Chinese imports to Europe, noting an 11% rise in volume alongside a 10% drop in prices over the past six months. He emphasized that the Banque de France is closely monitoring these developments.