In particular, after the Financial Supervisory Service (FCA), a financial authority in the UK, issued a warning message stating that there is a risk that speculative virtual asset investments may run out of their investments, investors appear to be increasing their investment risk.
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Bitcoin prices have surged more than threefold in less than three months since October last year. On the 8th, it soared to $42,000 for the first time in history. However, after two days, it showed a sharp adjustment, reaching up to 26%, threatened to the $30,000 range, and then recovered to around $39,000.
Sasaner Streeter analyst at Hargreaves Lansdown, an investment platform, said, “Recently, the price of bitcoin has risen mainly reflecting expectations for future prices. The FCA is concerned that it is difficult to control the virtual asset market, which is showing a sharp fluctuation. That is why investors are warned against reckless investment aiming for high returns in the short term.”
Regarding this, Lay Kaalaf, an analyst at AJ Bell, an investment brokerage firm, said, “Anyone who invests in virtual assets should be prepared for the possibility of throwing away all of their investments or causing significant losses.” While investing in bitcoin, there is a tendency to think of it as a risk equal to investing in stocks.”
However, apart from these speculative investors, the fact that institutional investors who are burdensome to invest in the stock market that are too expensive or want to hedge the decline in the currency value are increasing their bitcoin investment in order to diversify their portfolio, lowering the investment risk compared to the 2017-2018 rally. Is interpreted as a passage.
Matt Blom, who works as a global leader in trading at Diginex, a virtual asset trading platform, said, “Because of the depreciation of the dollar and concerns about inflation, more and more investors are filling 5% of their portfolios with bitcoin. It’s definitely different from the year.”
According to Glassnode, an actual virtual asset data company, by 2017, there were over 1600 institutional investors or big-handed investors with more than 1,000 bitcoins, but now more than 2,400 investors with more than that.
Luffer Investments, a UK asset management company, started investing directly in Bitcoin in November last year, and has already earned an operating income of between £327 million and £693 million. Thanks to this, the rate of return over the past 12 months has reached 16.8%. “Rougher has made this much of a return from investing in bitcoin and the rest in traditional assets,” says Calaf analyst.
As such, it seems that investors who participate in low-cost buying in the adjustment process still remain. Simon Peters, a virtual asset analyst at Itoro, an investment brokerage firm, said, “Institutional investors who are optimistic about this market were participating in low-cost purchases during this adjustment process.”
However, Kalf analyst advised that individual investors should be cautious about buying at low prices. He warned that “investment in virtual assets is not subject to investor protection by the financial authorities, so if the situation goes wrong, a part of the investment will not be able to be rescued.” For this reason, the FCA has banned individual investors from trading bitcoin futures starting this month.