The number of UK adults owning cryptocurrencies like bitcoin has risen to an estimated 2.3 million, despite warnings from regulators and the Bank of England head that people should be prepared to lose all their money. .
Investigation conducted by the Financial Conduct Authority It also revealed that nearly 20% of shoppers said they were driven by fear of missing something, while one in seven was going into the red to finance their cryptocurrency purchases.
The median stake has risen from £ 260 a year ago to £ 300, although the highest stake reported by one respondent was £ 7 million. Meanwhile, the typical profile of investors was “predominantly male, over 35 years old and [in the] AB social grade, ”said the FCA.
Amid evidence that a new generation of mostly younger DIY investors are pouring their money into companies like bitcoin, ethereum, and Ripple, the FCA conducted a detailed investigation in January that concluded that cryptocurrencies “appear to have normalized.” , with less than they invest. viewing them as a gamble and more as a legitimate alternative asset.
When looking at the top reasons people gave for investing money in bitcoins and other products, 18% responded, “I don’t want to miss out on buying cryptocurrencies.”
While the majority of people said they paid for their cryptocurrency using their own disposable income or cash, 14% said they had used some form of loan, be it a credit card, a bank overdraft, or a loan from friends. family members or a financial company.
Laith Khalaf, a financial analyst at investment firm AJ Bell, said that the fact that buyers have borrowed to buy cryptocurrencies “is just terrifying.”
He added: “FOMO [fear of missing out] … It is never a good motivation to make financial decisions. Buying cryptocurrencies is a dangerous financial activity and while many consumers seem to understand the risks, some are playing with fire carelessly. “
The 2.3 million people estimated to own cryptocurrencies are equivalent to about 4.4% of UK adults, and that is more than a fifth from a year ago, when the figure was 1.9 million.
The FCA research found that “enthusiasm for cryptocurrencies as a product is growing among crypto users,” and that two in three (66%) of owners said they had enjoyed a positive return on their investment, with 11% reporting a loss.
But he also found that while the profile of the industry had increased, “the overall level of understanding has decreased.”
The research comes on the back of a surge in interest in bitcoin and other digital currencies, driven by prices hitting all-time highs, tweets from high-profile figures like Tesla CEO Elon Musk, and posts from influencers on sites like Instagram. and TikTok.
Some institutional investors and traditional financial services firms have moved into the sector, although there have been a number of warnings from high-level figures that the extreme volatility of cryptocurrencies means investors could face destruction.
Andrew Bailey, the Governor of the Bank of England, said earlier this year that bitcoin “had no intrinsic value at all”, adding: “I have said several times: ‘Only buy bitcoin if you are prepared to lose all your money.’ . “
European Central Bank regulators have compared bitcoin’s meteoric rise to other financial bubbles such as the “tulipomania” and the South Sea bubble, while the FCA said putting money in cryptocurrencies “is high risk … investors. they should be prepared to lose all their money. ” ”.
Two-thirds of cryptocurrency owners own bitcoin, while the next most popular were Ethereum (35%), Litecoin (21%) and Ripple (18%), according to FCA research.
George is Digismak’s reported cum editor with 13 years of experience in Journalism