For the last few months, the Bitcoin has been riding high. How high? Three times what it was only less than a year ago. However, a few days back, it lost 20% of its value. But this may not be the last worry cryptocurrency investors may have, as UK’s Financial Conduct Authority is serving a serious warning to them, saying that they should “… be prepared to lose all their money.”
Stock Exchange vs Valuables
Today, so many people have become traders online, either full-time or on their days off. They hope to grow their capital by investing in the stock exchange. With the Bitcoin gaining in popularity over the last few years, many have used their money to buy some. Even more people joined, as the cryptocurrency simply soared over the last few months. But it went crashing down by 20% a few days ago, making $170 billion disappear in a few hours. This is real money that people loss. That is why the regulator’s warning came.
There was a time when people would think of investing their money into buying houses or other items that don’t lose value over time, such as diamonds and other high-end jewels, mens fur coat and paintings by famous artists. But with the democratization of the stock exchange, many are trying their hands at financial investments, which can be quite a bit riskier, as many learned when they lost money on the bitcoin a few weeks back.
Cryptocurrency: A Very High Risk
Following the large loss of the Bitcoin, UK’s Financial Conduct Authority decided to send a very strong message to citizens of the country. It warned them that investing money into cryptocurrency was a very high risk and that, indeed, they could lose all the money they would put into it. Knowing that some firms were strongly suggesting crypto assets to their clients, highlighting promising potential gains, they felt like they had to make a stand.
It came after the disappearance on the stock exchange of more than $200 billion, in only one day, for the total value of all virtual currencies combined. Only a few weeks ago, Bank of America called the rise of the Bitcoin, potentially the “mother-of-all-bubbles” in the financial world, after it gained 300% in only one year. Some investors started comparing it to gold, when people buy it, in difficult time, to protect their money. The downfall literally showed that it wasn’t the case, at the expense of many small investors, who lost a lot of money in only 24 hours.