Experts from one of the world’s largest banks, Swiss UBS, warned investors about the risks of losing all their money when investing in bitcoin.
The value of the first cryptocurrency can easily drop to zero due to government regulation or competition.
“Bitcoin risks are approaching 2017 levels. Investors buying at current prices could lose 40% of their investment, ”warns Cane Island investment manager Timothy Peterson.
“Institutional crypto products raised only $ 29 million in the first week of the new year, versus $ 1 billion in the week before Christmas, according to CoinShares. If the pause lasts longer, crypto market participants may perceive this as the readiness of the smart money to take profits after an impressive rally in recent months, “the FxPro analyst team notes.
Strategists at UBS Global Wealth Management, one of the world’s largest private equity funds, believe the industry will face significant risks in the long term.
Among the latter, they noted regulation and possible competition from central bank digital currencies (CBDC), writes forklog.
They cited the Netscape browser and the Myspace social networking site as examples, which they said were “widely popular but disappeared over time.”
“From our point of view, there is little to prevent the price of cryptocurrency from dropping to zero when a higher quality version is launched or if regulatory changes suppress market sentiment. Netscape and MySpace are examples of this, ”said Michael Bollinger, UBS Wealth’s chief investment officer for global emerging markets.
Experts acknowledged that in the short term, prices for cryptocurrencies may rise, but in the future, this market will inevitably face regulatory intervention.
“Investors in cryptocurrencies should limit the size of their investments to the amount that they are willing to lose,” concluded analysts at UBS Wealth.
We will remind that earlier the Financial Conduct Authority (FCA) of the UK warned investors that investing in crypto assets is associated with high risks. On January 6, a ban on the sale of cryptocurrency derivatives to retail investors came into effect in Britain.
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