The Strategist

UBS warns against buying bitcoin

01/18/2021 - 03:19

Strategists at Swiss bank UBS warned investors about the risks of devaluation of cryptocurrencies, writes Bloomberg with reference to a message, which employees of the division of UBS Global Wealth Management, engaged in private capital management, sent to clients in response to inquiries about the advisability of buying bitcoins.

© 2018
© 2018
The bank's experts said that in the long run, digital assets could easily lose all their value due to competition or government regulation. "We believe that there is nothing much to stop the value of crypto from collapsing to zero when some improved version comes along, or if changes in regulation affect the [market] sentiment," the note's authors said. As examples, they cited the Netscape browser and the social network Myspace, which, they said, "were widely popular but disappeared after some time."

Experts acknowledged that in the short term, cryptocurrency prices may rise due to dynamics of the market, investors and restricted supply. However, in the future this market will inevitably face regulatory intervention, they noted, recalling that the UK has already banned the purchase of cryptocurrency derivatives by retail investors. "Cryptocurrency investors should limit their investments to the value they are willing to lose," UBS Wealth analysts concluded.

Over the past few months, the global cryptocurrency market has regularly broken its own capitalization records. From the beginning of January 2020 to January 11, 2021, the world's most popular cryptocurrency, bitcoin, went up by 400%, taking other digital currencies with it. However, as early as January 11, the crypto market experienced a correction: the value of bitcoin fell by 22% and its main competitor, Ethereum, by 25%.