Bank of England Governor Andrew Bailey has warned cryptocurrency traders about losing all of their money if they decide to invest in Bitcoin and other altcoins. Bailey said that cryptocurrencies “have no intrinsic value” and crypto traders should be ready to lose all their investment.
Cryptocurrencies such as Bitcoin, Ether, and Binance have been breaking all-time high records in the last 12 months. However, Mr. Bailey reminded investors of the 2017 crypto bubble when Bitcoin plummeted from $20,000 to $3,122 in less than a year.
Bailey was asked in a press conference Thursday about the price increase of digital currency when he said that “They have no intrinsic value. That doesn’t mean to say people don’t put a value on them, because they can have extrinsic value. But they have no intrinsic value.”
“I’m going to say this very bluntly again,” he added. “Buy them only if you’re prepared to lose all your money.”
Bailey’s comments were consequential with the warning from the United Kingdom’s Financial Conduct Authority.
“Investing in crypto assets, or investments and lending linked to them, generally involves taking very high risks with investors’ money,” the financial services watchdog said in January.
Bitcoin surges by 90% while Dogecoin gains %13,000 in a year
Bitcoin soared 90% this year alone. This followed the institutional adoption of the cryptocurrency as well as heavy investments like Tesla’s (NASDAQ: TSLA). The electric car manufacturer invested $1.5 billion in Bitcoin. Since that deal, the value of Tesla’s holdings have blasted above $2.4 billion.
On one hand, Bitcoin enthusiasts argue that the scarcity of Bitcoin supply is what makes it so valuable. Additionally, several traders believe that Bitcoin can be a hedge against inflation. Especially that central banks around the globe are racing to print money due to the Covid-19 economic damage.
On the other hand, watchdogs and skeptics such as Warren Buffett believe that Bitcoin is of no value and that a market bubble will soon burst. For instance, Michael Hartnett, chief investment strategist at Bank of America Securities said that the rally of Bitcoin is like the “mother of all bubbles,” while Alvine Capital’s Stephen Isaacs said there are “no fundamentals with this product, period.”
In conclusion, altcoins have made even larger gains than BTC. Ether, the native token of the Ethereum blockchain, has surged 360% year to date, while the meme-based cryptocurrency Dogecoin is up 13,000% Y.T.D.