UK watchdog warns cryptocurrency traders amid Bitcoin volatility

UK watchdog warns cryptocurrency traders amid Bitcoin volatility

Bitcoin hits new record above $35,000 following massive drop
Britain’s financial watchdog issued a dire warning to cryptocurrency traders Monday as Bitcoin took investors on another wild ride.
The UK’s Financial Conduct Authority said consumers who invest in the red-hot cryptocurrency market “should be prepared to lose all their money” because there are so many risks involved.
Firms promoting crypto investments may overstate the returns that traders will reap and understate the risks of the market, and investors who buy in are unlikely to have access to consumer protections if something goes wrong, regulators said.
“Consumers should be aware of the risks and fully consider whether investing in high-return investments based on cryptoassets is appropriate for them,” the agency, known as the FCA, said in the warning . “They should check and carefully consider the cryptoasset business involved.” Getty Images
Officials also noted that there’s no guarantee digital currencies can be converted back into cash and that their prices are known to swing wildly.
Monday offered yet another example of that volatility as the price of Bitcoin — the world’s largest cryptocurrency — plummeted after a record-breaking rally last week.
Bitcoin was trading at $31,702.83 as of 3:27 p.m., down more than 12 percent from a day earlier and about 24 percent from the all-time high of $41,962.36 that it reached on Friday, according to CoinDesk data . Bitcoin has been volatile of late. Getty Images
Other popular coins also suffered heavy losses — Ethereum, the second-largest cryptocurrency by market value, was recently down about 18 percent at $974.46, while XRP was off 8.7 percent at roughly 27 cents.
Institutional investors have helped drive up Bitcoin’s price in recent weeks amid growing perceptions that it offers protection against inflation and could even become an alternative to gold.
But the FCA cast cryptocurrencies broadly as risky, “speculative” investments that could empty retail traders’ pockets given how loosely regulated they are.
“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money,” the agency warned. “… 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.”

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