FCA warns crypto-assets market offers little protection for consumers as Bitcoin Prices bounce back towards $40,000

Bitcoin price has experienced a wild swing that almost made investors believe that its previous bullish rally was over and it was time to sell and ride on a long bearish trend.

In a span of about 8 days, the value of Bitcoin dropped to slightly above $31,000 from over $41,500, and now it is heading back to break the all-time high of $41,515 that it set on 8th, January 2021. That will simply mean it will have lost and gained close to $10,000 in one week. And that would prove the theory that Bitcoin always breaks its all-time highs.

But it is the current wild roar back towards $40,000 that has left analysts, investors, and regulators’ tongues wagging since there is no other financial asset that has had such a wild swing movement. And that made the FCA and some cryptocurrency analysts warn investors that they should be ready for a bruising ride if they chose to invest in the volatile cryptocurrencies.

UK’s Financial Conduct Authority (FCA) warning to crypto investors

Earlier at the start of January this year, the FCA banned the sale of cryptocurrency derivatives to retail investors in the UK. And that means that Retail investors are at the most risk since they are not covered by the FCA in case something happened to the cryptocurrency market.

Generally, investing in cryptocurrencies is too risky a business even if it has extraordinary returns if the speculations favour the trader/investor.

Nevertheless, for small traders, slight market movements normally mean a lot them. Their positions are usually small and any sudden large movement like the one that occurred this week where Bitcoin lost about $10,000 in about two to three days could mean rendering them out of the market.

AJ Bell’s financial analysts, Laith Khalaf said, “Anyone who invests in cryptocurrencies should be prepared to lose their shirt, or a considerable portion of it. . . The fear is that consumers are leapfrogging stocks and bonds and going straight from cash to bitcoin, in the mistaken belief it’s much the same.”

And that is a fact considering how volatile the cryptocurrency markets have been since they came into existence. There has always been a notion that cryptocurrencies are driven by a hidden force wanting to buy at low prices and sell at high prices.

Hargreaves Lansdown’s analysts, Susannah Streeter said, “Bitcoin’s price is being driven primarily by future price speculation. The FCA clearly believes the crypto Wild West could be running out of control, and is warning that consumers risk losing all their money if they succumb to promises of fast and high returns.”

But all that said, Bitcoin had a major boost in 2020 after lots of investors, companies, and institutions invested in it fearing that the financial crisis resulting from COVID-19 would make the dollar lose value and thus risk their portfolios.

Diginex global head of sales, Matt Blom said, “Fears around devaluation of the dollar and the chance of inflation eating away at the dollar mean you’re seeing people come in and put up to 5 per cent of [their] portfolio into this asset class. . . . There are a lot of investors placing money in this space who weren’t here in 2017.”


Bitcoin Prices have indeed defied the expectations of many people who thought that they could dip in the first days of January 2021 following its monster rally towards the end of 2020. And this was because most people still remember a similar incident in 2017 – 2018.

As it stands at the moment, the value of a single Bitcoin coin could likely hit $50,000 if it succeeds in breaking the current all-time high of $41,515.

An elite investor on eToro, Butler, likened what is happening now to what took place just before hell broke loose after 2017’s bullish rally.

He said, “I would not be overly surprised if bitcoin broke through $50,000 and beyond, but I have also seen it lose more than 80 per cent of its value. You have to ask yourself, are you in a financial position to lose 80 per cent of your holdings in cryptocurrencies right now?”


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