Following what has been a record resurgence in Bitcoin amid an increased interest among large institutional investors, a number of cryptocurrencies suddenly tumbled on Monday, wiping out nearly $190 billion from the entire crypto market. As a result, the abrupt decline prompted the UK Financial Conduct Authority (FCA) to issue a warning to amateur investors regarding the heightened volatility in the crypto market.
On Monday, the FCA issued a stark warning to investors, highlighting the risks associated with cryptoassets. “The FCA is aware that some firms are offering investments in cryptoassets, or lending or investments linked to cryptoassets, that promise high returns,” the regulator noted. However, “if consumers invest in these types of product, they should be prepared to lose all their money.”
Indeed, the pre-existing risks in cryptoassets become elevated when coupled with scam activity, as well as unregulated companies directing marketing material to consumers that only focus on astronomical returns and no downsides. “As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply,” the FCA continued.
Bitcoin soared to record levels last week, rising to a high of $41,973 as investors treated the cryptocurrency as an alternative to gold in hedging against inflation. However, the high volatility in Bitcoin’s price has raised concern among analysts. According to a recent note by the Bank of America, the cryptocurrency market is the “mother-of-all-bubbles.”
Information for this briefing was found via the FCA and the Bank of America. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.