By Samuel Indyk
Investing.com – The UK’s Financial Conduct Authority has published a consumer research paper into cryptocurrencies which estimates a total of 2.3mln Britons hold cryptocurrency in some form, with the median holding up from £260 to £300.
The regulator said attitudes towards cryptocurrencies have shifted; as cryptocurrencies appear to have become more normalised, fewer crypto users regard them as a gamble (38%, down from 47% in their previous survey).
“That is a dangerous financial attitude to take, given the volatility of cryptocurrencies and tokens,” said Hargreaves Lansdown (LON:) Senior Investment and Markets Analyst Susannah Streeter.
What may be even more worrying for the FCA is the relaxed attitude of investors to their warnings. Only one in ten of those surveyed who had heard of cryptocurrencies said they were aware of the consumer warnings on the FCA website. Of those, 44% said the warnings had no effect on their plans to keep or purchase cryptocurrencies.
“It’s no surprise that the FCA has used the publication of this research as an opportunity to issue a fresh warning that people risk losing all their money if they trade in crypto assets,” Streeter added.
The survey also showed that 14% of cryptocurrency buyers had borrowed to buy these digital assets.
“The fact that 14% of crypto buyers have borrowed to invest is simply terrifying,” said AJ Bell Financial Analyst Laith Khalaf. “The extreme volatility and uncertain long-term outlook for crypto means holdings can be wiped out, leaving borrowers with nothing but their debt as a memento.”
The survey showed that some investors were driven by ‘fear of missing out’ and around 20% were buying cryptocurrencies instead of other more stable assets.
Unsurprisingly, was the most popular holding among those who had invested in cryptocurrencies.
The survey found that two thirds of users hold Bitcoin, 35% hold , 21% hold , 18% hold and 15% hold .
The research report comes amid a mixed picture for cryptocurrencies. Institutional adoption, which looked like it was picking up pace at the start of the year, has slowed after Tesla (NASDAQ:) said they would stop accepting Bitcoin due to environmental concerns.
Fears over increased global regulation in the space continue to hold prices down with China cracking down on crypto mining activities and other countries potentially following suit.
On the other hand, El Salvador has just passed regulation making Bitcoin legal tender in the country and many large companies and governments are still making moves in the cryptocurrency space.
It’s clear that cryptocurrencies are here to stay but the question is what coins will survive and in what role will they have in the financial ecosystem.
At 13:53BST, Bitcoin was trading around $38,800, broadly unchanged over the last 24 hours.
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