Bitcoin fell by 0.67% against the US dollar on Monday, dropping to the 34,484.0 level and giving up part of the gains from the previous session. In weekly terms, Bitcoin went up by 7.04% against the greenback, recovering from the previous week's 9.07% loss.
Bitcoin has been suffering from volatility mainly because the markets have been sending confusing signals regarding the adoption process of this cryptocurrency as a medium of exchange. On one hand, some institutions and market players have expressed their enthusiasm for adopting and even offering this asset to their clients, as in the case of Goldman Sachs and Elon Musk.
On the other hand, other market players like Tesla have announced their decision to abandon Bitcoin as a medium of payment, and some governments are already restricting Bitcoin mining due to its negative effects on the environment.
Contradicting signals regarding the status of Bitcoin have continued to be relevant. On Sunday, the owner of Mexico's Banco Azteca posted in his Twitter account that he is pushing Mexico to adopt Bitcoin, calling on his followers to invest in the asset.
"Me and my bank are working to be the first bank in Mexico to accept Bitcoin," he tweeted, asking his followers to buy Bitcoins instead of selling them.
However, Mexico's central bank issued a statement, making it clear that using cryptocurrencies in the country's financial system is forbidden, reiterating the risk associated with those financial assets and adding that this policy won't change anytime soon. Mexico's attitude towards Bitcoin contrasts with that of El Salvador's, which announced that Bitcoin would become a legal tender later this year.
Moreover, the Federal Reserve's vice chair for supervision recently offered a not-so-optimistic outlook regarding Bitcoin.
For him, Bitcoin's main attractions are its relative novelty, at least compared to other alternatives to fiat currencies like gold, and its anonymity, though this has been cast into doubt given the fact that the US government has been able to track them. The vice chairman added that anonymity would make people a target for increased scrutiny from law enforcement and that the novelty will eventually fade.
According to his arguments, Bitcoin will remain a risky and speculative asset instead of becoming a solid alternative to fiat currencies, which implies that it won't affect the role of the US dollar.
By 9:10 GMT, Bitcoin went down by 0.07% against the US dollar to the 34,927.0 level.