Bitcoin Rally Halted With FCA Risk Warning

Bitcoin dropped more than 19% to $30,699 today, its lowest level in a week after the Financial Conduct Authority (FCA) issued a warning that investing in crypto assets is high risk.

Last week Bitcoin was a record £42,000 more than double from early December 2020.

Increased interest from institutional investors had helped the recent success as it is often seen as an attractive option against traditional financial markets.

The second largest cryptocurrency Ethereum also dropped 23% to £985.

The fall came after the FCA announced customers should be prepared to lose all their money as these types of investments are considered risky and highly volatile.

Comment

Investors in cryptocurrency assets do not have access to the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS) should the investment fail. 

Cryptocurrency assets are not regulated in teh UK yet.  This means the FSCS can only offer compensation and FOS complaints handling arbitration if cryptoassets were recommended by an adviser and mis-sold or if something goes awry with regulated financial products only.