The City regulator in the U.K. suggests that investors are gradually less worried about the risks of investing progressively in cryptoassets. The research triggered the Financial Conduct Authority (FCA) into a warning over “crypto investors risking losing the lot.”
Around 14% of surveyed crypto buyers asserted that they had borrowed to invest in the wake of big gain reports, a statistic considered by some as “simply terrifying.”
David Einhorn's Greenlight Capital returned -2.9% in the second quarter of 2021 compared to 8.5% for the S&P 500. According to a copy of the fund's letter, which ValueWalk has reviewed, longs contributed 5.2% in the quarter while short positions detracted 4.6%. Q2 2021 hedge fund letters, conferences and more Macro positions detracted 3.3% from Read More
Not too Fearful of Losing All
According to FCA estimates, there are 2.3 million adults in possession of cryptoassets in the U.K., the most common being Bitcoin. The spectacular fluctuation and the peaks in the price of this product have drawn flocks of investors and a whole flood of marketing activities.
The City regulator also noted how the proportion of investors considering stakes in cryptoassets as “a gamble” had dropped from 47% last year to 38%. Further, nearly 50% of those who have invested already are weighing the chance to buy more.
“If consumers invest in these types of products, they should be prepared to lose all their money," said Sheldon Mills, from the FCA. Similarly, Laith Khalaf, financial analyst at AJ Bell, said: "There is a dark underbelly lurking in the figures, which suggests there is still potential for widespread consumer harm.”
“The fact that 14% of crypto buyers have borrowed to invest is simply terrifying. The extreme volatility and uncertain long-term outlook for crypto means holdings can be wiped out, leaving borrowers with nothing but their debt as a memento.”
The Bitcoin Rollercoaster
After the so-called “Bitcoin rollercoaster,” the cryptocurrency seems to have entered a dark tunnel trapped between a $40,000 ceiling and a $32,000 floor. Still, this relative stability could soon be rocked as many experts believe that bitcoin will down-spiral in the range of $20,000 to $23,000, from which the token could take off again.
After a May to forget –in which Bitcoin fell by 35% after Elon Musk’s rant– the cryptocurrency headed to June in desperate need of good news. Its official adoption in El Salvador a few days ago just spurred the price Bitcoin was looking for.
With such positive news and the supporting comments earlier this week by well-known billionaire investor Paul Tudor Jones, Bitcoin returned to the $40,000 ceiling before piercing down to $39,000 barely 48 hours later.
Although these upshifts may attract the attention of those investors eager for good news, analysts at JPMorgan Chase & Co. (NYSE: JPM), Natixis SA (EPA:KN), and eToro ask for caution as their projections signal a bear market plunge. Recently, investment bank strategists led by Nikolaos Panigirtzoglou warned that bitcoin futures were emitting bad signals as the token's spot price rose above futures prices.