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Bitcoin hits all-time high but a quarter of crypto investors have zero savings

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Written by: Emma Lunn
09/02/2021
The price of the cryptocurrency has gone above $47,000 (£34,000) for the first time, pushing its market capitalisation close to $900 bn.

The price surge means Bitcoin has overtaken Facebook and Tesla to become the ninth most valuable asset in the world. Other cryptocurrencies such as bitcoin cash, dogecoin, ethereum and Litecoin, have also risen in value in recent days.

However, a significant proportion of cryptocurrency investors don’t have the basic building blocks of a sound financial plan in place, according to AJ Bell.

Six out of 10 crypto investors don’t have an ISA, half don’t have a pension, and a quarter don’t have any traditional savings or investments. More than eight in 10 (83%) crypto investors don’t have an investment portfolio, and 23% have no savings or investments at all.

Findoutnow questioned 1134 cryptocurrency holders on behalf of AJ Bell.

It also found that only one in five crypto investors would be willing to lose their entire investment, while 30% wouldn’t be willing to lose any of their investment in cryptocurrencies. Only one in four cryptocurrency investors would be willing to lose 75% or more of their investment.

The Financial Conduct Authority warned last month that investors in cryptoassets should be willing to lose all their money.

The figures have prompted concern that a generation of investors have leap-frogged traditional savings and investments and jumped straight into the deep end by buying cryptocurrencies.

Laith Khalaf, financial analyst at AJ Bell, said: “There are a number of concerning findings from our research. Not only are many consumers buying cryptocurrencies without having an ISA, pension, or savings account in place, there also seems to be a significant misunderstanding of the risks involved. 30% of cryptocurrency investors are not willing to lose any of the money they’ve invested, which suggests they lack an appreciation of the potential downside of their investment.

“The unpredictability of the future of cryptocurrencies means putting money into Bitcoin is more speculation than investment. In 10 years’ time, it’s possible the price of Bitcoin will be significantly higher than it is now, it’s also possible it will be close to worthless. It’s such a new and evolving market that no one can predict with any confidence which one of these scenarios, or any in between, might prevail.”

“Our research suggests there are some investors who are buying cryptocurrencies in a sensible manner – on top of a diversified portfolio, and with their eyes wide open to the potential losses. But these measured crypto investors seem to be the exception rather than the rule.”

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