Bitcoin surges past $50,000 for the first time
The surge in value comes just weeks after Bitcoin went above $47,000 (£34,000) for the first time, pushing its market capitalisation close to $900 bn.
However, it’s been a volatile start to 2021 for the popular cryptocurrency. In January, Bitcoin’s value fell by a fifth in just three days, falling from $41,500 to $34,400.
Bitcoin has been buoyed by interest from the likes of Tesla chief executive Elon Musk, who was revealed to have bought $1.5bn of the cryptocurrency.
Paypal has also announced that users will be able to buy, hold and sell cryptocurrency directly from their account sometime in 2021.
Anyone thinking of investing in Bitcoin, or other cryptocurrencies, should be aware that their money will not be protected by the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS) if things go wrong.
Cryptocurrencies’ volatility, lack of regulation and absence of protection for investors means experts are generally cautious about investing in cryptocurrencies.
Myron Jobson, personal finance campaigner at Interactive Investor, said: “The worry is, at a time where the investment industry has seen an influx of people investing for the first time, novice investors will get swept up in ‘Bitcoin mania’ and invest in the coin without fully appreciating the risks. Bitcoin remains a high-risk investment and the price swings have historically been too wild for many investors to stomach.
“The ascendency of cryptoassets like Bitcoin hasn’t escaped the attention of the city watchdog, which issued a warning to investors of the risks of investments advertising high returns based on such products in January. People should keep this in mind before investing in the cryptocurrency with fear of missing out.”
Anthony Morrow, co-founder of financial advice service OpenMoney, said: “Investors should be very wary of ‘investing’ in cryptocurrencies like Bitcoin. It is very high risk, with huge fluctuations in value, making it no different to gambling with your cash.
“I wouldn’t recommend this as a serious investment strategy. There’s been a worrying influx of social media influencers and football clubs promoting Bitcoin and other cryptocurrencies to retail investors without explaining the risky nature of these unregulated investments. In my opinion, this is an area that needs to be more strictly regulated to protect people from serious financial harm.
“If you are considering buying Bitcoin or another cryptocurrency, make you sure you are comfortable with the level of risk you are taking – remember that you could end up losing most, if not all, of your money.”