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"Put together to lose all of your cash," warn Crypto buyers

UK analysts noted that digital currencies are high risk speculative assets and could be a market bubble.

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January
12, 2021

2 min read

This article has been translated from our Spanish edition using AI technologies. Errors can occur due to this process.

Investing in an asset as volatile as the cryptocurrency market is always a risk. The UK's Financial Conduct Authority (FCA) has warned electronic currency investors that they are at risk of losing all of their money. According to analysts, fraud activity increases investment risks.

The last few days have been dizzying for cryptic coins. Yesterday, Jan. 12, Bitcoin depreciated about 20% and fell below $ 30,000 after hitting a record high of more than $ 40,000 per unit.

$ 41,500.

– Bitcoin (@Bitcoin) January 8, 2021

In this context, British specialists point out that investments and credit products in connection with cryptocurrencies involve “very high risks”.

"When consumers invest in these types of products, they must be ready to lose all of their money," warned the FCA.

The panel noted that cryptocurrencies are "high-risk speculative investments" and that those who buy them need to be sure of "what they are investing in, the risks associated with the investment and what regulatory protections are in place".

For his part, financial analyst Laith Jalaf agrees that Bitcoin's sudden growth could be a market bubble.

“The regulator is clearly concerned that the high risks already inherent in crypto assets are compounded by fraudulent activity as well as unregulated companies targeting consumers with marketing collateral that highlight the benefits but not the potential. Disadvantage of investing in crypto assets, "Jalaf explained in statements on the CNBC channel.

Bitcoin versus gold

On the other hand, there are those who predict a bright future for cryptocurrencies. JPMorgan analysts said Bitcoin could rise to $ 146,000 and compete with gold as an "alternative" currency. However, they add that it will only do so if the cryptocurrency's market cap increases 4.6 times to match the private sector's investment in gold of $ 2.7 trillion.

At the beginning of 2020, Bitcoin had an average price of $ 7,300 and ended the year at over $ 29,000. This means an approximate growth of 300% over the past 12 months. At the beginning of December alone, the cryptocurrency was worth around 19,000 US dollars, an increase of 53% in one month. Then, on January 7, it hit its all-time high of 40,000 and dropped to 30,000 a few days later. For now, it remains pretty stable, fluctuating between $ 32,000 and $ 36,000 per unit.

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