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Bitcoin plunges 10% – FCA warns against cryptocurrencies

Bitcoin crashed over 10% on Monday morning to around $34,000. This comes after a recent surge where the price of the cryptocurrency doubled in just five weeks.

As the price of Bitcoin drops, the FCA has issued a warning around investing in cryptocurrencies. It said: “Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. 

“If consumers invest in these types of product, they should be prepared to lose all their money. As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply.”

Reasons that the FCA are speculative of cryptocurrencies are down to the lack of customer protection, price volatility, product complexity, charges and fees, and the marketing materials.

Bitcoin isn’t the only cryptocurrency that is down this morning.

Kyle Rodda is a market analyst at IG. She commented on Bitcoin’s turbulent nature: “Perhaps betraying it wares as a risk-asset itself, Bitcoin and other cryptocurrencies are coming under selling pressure too today, as the upward momentum in prices begins to diminish, and even threaten to roll-over. Bitcoin is always a victim of thin liquidity, so much like last week, the dip so far seen in the cryptocurrency could be quickly bought come this evening when trading conditions become a little healthier.

“Of course, after such an extraordinary rally in recent weeks, to historically overbought levels, Bitcoin is arguably another asset overdue for a pullback.”

Bitcoin has doubled in value over December as it hit the $20,000 mark halfway into the month. Its price has increased by more than 700% since March 2020. It has critics and many analysts predicted the bubble is due to burst soon.

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