Bank of England Governor: “Virtual investors can lose money”

Recently, virtual currencies like Bitcoin, Ether and even Dogecoin have continuously set price records, making many people recall the virtual currency bubble in 2017, when Bitcoin soared to nearly $ 20,000. then plummeted to just over $ 3,000 a year later.

At a recent press conference, when asked about the sharp rise in prices of many cryptocurrencies recently, Mr. Andrew Bailey, who served as CEO of the British Financial Authority (FCA). , emphasizing that cryptocurrencies have no intrinsic value.

” I have to frankly reiterate one thing: Buy virtual money only when you are prepared to lose all your investment, ” Mr. Bailey warned.

Previously, FCA also issued similar warnings to crypto investors.

” Investing in cryptocurrencies, or the investments and lending related to them, often comes with extremely high risks ,” the UK financial services watchdog warned earlier this year. ” If investors buy these products, they should be prepared to go empty-handed .”

From the beginning of the year until now, Bitcoin’s price has risen more than 90% thanks to the growing interest of institutional investors as well as big businesses like electric car maker Tesla. In January, Tesla said it had spent $ 1.5 billion on Bitcoin and its investment so far has grown to nearly $ 2.5 billion.

Proponents of Bitcoin see this virtual currency as a store of value similar to gold because of a limited supply (21 million bitcoins). They also argue that Bitcoin can be a tool against inflation risks in the context of central banks around the world continuously pumping more money into the economy to fight the Covid-19 pandemic.

Meanwhile, opponents of Bitcoin are a ” financial bubble ” just waiting to explode.

” Bitcoin is like the mother of every bubble ,” said Michael Hartnett, chief investment strategist at Bank of America Securities, while Alvine Capital, chairman of the investment board of Alvine Capital, believes ” Bitcoin is a product without. Basic Elements “.

Although Bitcoin is the largest virtual currency in the market and has attracted the most attention, lately, some alternative virtual currencies have begun to grow strongly, even outstripping Bitcoin. Ether, a virtual currency based on Ethereum blockchain technology, has seen a gain of more than 360% from the beginning of the year, while Dogecoin – a virtual currency stemming from an online trend – has increased in price by 12,500%.

Dogecoin’s rally is tied to social media posts by celebrities like billionaires Elon Musk and Mark Cuban, and a wave of investment from retail investors, analysts said. on Robinhood application.

Analyst David Kimberley of Freetrade (UK) investment app describes Dogecoin’s spike as “a prime example of the theory of more foolish to invest “, referring to selling assets that are too expensive. for investors willing to pay a higher price.

Currently, many central banks around the world are considering issuing their own rollover money. Last month, the BOE and the UK Treasury set up a special group to explore central bank digital currencies (CBDCs). The BOE said such a digital currency would coexist, not replace cash and bank deposits.