Bitcoin and other cryptocurrencies have caught the attention of the British, but new research shows that an increasing number of speculative investments are making and potentially borrowing without a clear understanding of the risks involved.
With bitcoin hovering around $ 40,000 per coin and other cryptocurrencies soaring to new heights, crypto has become a real alternative to traditional investments for some.
The latest consultation paper from the Financial Conduct Authority estimates that around 2.3 million Britons now own cryptocurrencies, up from 1.9 million.
This represents a jump from 3.9 percent to 4.4 percent of the adult population who now own crypto.
Bitcoin Bonanza: More than 2 million Britons now own some form of cryptocurrency
The research was conducted in January when the price was around $ 30,000 per coin.
Just three months later, it had more than doubled to $ 60,000, meaning more speculative gamblers may have got involved since then.
While the majority of users pay for crypto with disposable income, 14 percent took out loans to invest, suggesting that around 320,000 people have gotten involved this way.
Laith Khalaf, financial analyst at the DIY investment platform AJ Bell, described this as “just terrifying”.
He adds, “There is a dark underbelly lurking in the numbers, suggesting that there is still potential for widespread consumer harm.”
Elsewhere, the FCA data showed that 78 percent of Britons have now heard of crypto assets, up from 73 percent the previous year.
Bitcoin’s recognition – up 4 percent to 82 percent – far surpasses any other cryptocurrency.
There is a dark downside lurking in the numbers, suggesting that there is still widespread consumer harm potential.
As awareness has increased, understanding of cryptocurrencies has decreased slightly, with 71 percent of those who have heard of crypto correctly defining it from a list of statements.
After the volatility of the past few weeks, experts have warned that investors who don’t understand the risks involved may be left out of their pockets.
Two-thirds of crypto users own Bitcoin, a 3 percent increase over the previous year. The second most popular currencies showed little change, including Ethereum (35 percent), Litecoin (21 percent) and XRP / Ripple (18 percent).
The average crypto punter is largely unchanged from the previous year and tends to be male and over 35 years old.
“The concern is that the new generation of investors, who neither saw the dot-com boom and crash around the turn of the millennium nor remembered the financial crisis of 2007/08, are participating in the recent market madness without really assessing the risks,” said Myron Jobson by Interactive Investor.
Average investments have increased from £ 260 to £ 300, but since the average crypto player tends to be higher up the income scale, they have a greater ability to bear losses.
The FCA research shows that crypto buyers are more than twice as likely to have an income of over £ 100,000 compared to any adult who has heard of crypto.
“The extreme volatility and uncertain long-term prospects for crypto mean that inventory can be destroyed and borrowers have nothing but their debts as a souvenir,” he added.
While a growing number of consumers are simply adding crypto to their existing portfolios, some are opting for bitcoin and other altcoins over traditional assets.
Almost a third of the users invested in a broader portfolio, 5 percent more than in the previous year.
It confirms research by consumer finance and research site Boring Money, which shows investors are experimenting with riskier assets, with nearly one in ten doing a “sideline” in cryptocurrencies.
Elsewhere, the number of people buying crypto instead of stocks and other investments has increased 4 percent to 19 percent.
“Instead of viewing crypto as a game of chance, research suggests that they are viewing it as an investment. For me, the rise of crypto is nothing more than a bubble fed by ignorance, ”said Rick Eling, Investment Director at Quilter.
“It’s understandable that people read the many headlines surrounding Bitcoin’s meteoric rise over the past year and decided they didn’t want to miss out, but if that’s the main reason to invest people need to rethink their investment strategy.” . ‘
Jobson added, “Whatever your approach to risk, cryptocurrencies should only be a tiny part of a portfolio, and the merits of having a diversified investment portfolio and avoiding the attempt at market time should not be forgotten.”
USA on the way to a “crypto takeover”?
As the UK begins to adopt cryptocurrencies, it is still lagging behind in admitting a number of countries.
According to a recent study by the New York Digital Investment Group, around 46 million Americans now own at least some bitcoin – around 17 percent of the adult population.
A new study by Small Business Price suggests that the US is the country most at risk of a “crypto takeover,” while the UK ranks 17th.
The US has already made progress in making crypto a part of standard financial offerings. Is already equipped with most crypto ATMs per person worldwide and is rated above average in terms of acceptance.
Hong Kong has seen a modest surge in interest over the past year, and with good broader technology adoption, there are opportunities for the market to grow over time.
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