Financial Conduct Authority: You could lose it all if you buy bitcoin

Savers who pile money into crypto currencies should be prepared to lose everything, watchdogs warn

Risky: Bitcoin is up around 70 per cent

Savers who pile money into crypto currencies should be prepared to lose everything, watchdogs warned.

City regulator the Financial Conduct Authority (FCA) said demand for digital coins such as bitcoin has increased this month as turmoil in the banking sector wreaked havoc on global markets.

And while the FTSE 100 index is down more than 6 per cent in March, and the index of top European banks by 20 per cent, bitcoin is up around 70 per cent.

Last night it was trading at around $28,000, well above its 2023 lows of $16,500 but a long way from the 2021 high of close to $70,000. 

The value of ethereum has also jumped by a quarter since the collapse of Silicon Valley Bank (SVB) earlier this month as investors look to diversify from traditional markets towards the unregulated world of crypto.

‘We have seen evidence of recent increased demand and social media hype promoting the purchase of crypto-assets,’ said a spokesman for the FCA. And in a stark warning to investors, the regulator’s spokesman dubbed crypto a ‘high-risk investment’ and told the Mail: ‘If you decide to buy crypto, then you should be prepared to lose all your money.’

Experts also warned savers not to put ‘all their eggs in the crypto basket’ as the banking downturn fuels the bitcoin rally.

Russ Shaw, head of Tech London Advocates, which represents tech start-ups, said: ‘I don’t believe that people should invest all of their assets in crypto, it is simply too risky, lacks transparency in certain areas and can be extremely volatile.’

Crypto is known for its volatility, as demonstrated by a string of high-profile collapses – including cryptocurrency exchange FTX in November – that wiped out more than a trillion dollars from crypto’s market capitalisation last year. Walid Koudmani, chief market analyst at broker XTB, said the dwindling confidence in the banking system was playing into the hands of crypto.

‘I think there should always be caution in this seesaw market,’ he said, explaining how some people are viewing crypto as a ‘safe haven’ – especially those who are ‘questioning the whole financial system’.

‘I’d say don’t put all your eggs in the crypto basket.’

A spokesman from CryptoUK, the trade association for the crypto-asset industry, said: ‘The desire for investors to feel they have more of a democratised system for their assets is a natural reaction to the fallout. We always advise that any investors conduct their own due diligence before entering into any investment opportunities.’