The average crypto holdings have gone up by £40 to £300
The FCA released a consumer research paper on Thursday detailing statistics and attitudes around the British public’s approach to cryptocurrencies.
The UK regulator found that the profile of cryptocurrenices, such as bitcoin and Ethereum, has risen. 78% of adults say they have heard of cryptocurrency, up by 5% in a year.
While most users said they purchased their crypto using their own cash, 14% said they used a form of borrowing, such as a credit card or borrowing from a friend.
The average holdings have gone up by £40 to £300, however the level of understanding of cryptocurrencies is declining. Only 58% of people surveyed agreed with the statement ‘I believe I have a good understanding of how cryptocurrencies and the underlying technology works’. While only a third strongly agreed.
Laith Khalaf, financial analyst at AJ Bell, comments:
“The FCA’s latest research on crypto paints a broadly positive picture and shows most consumers are using crypto sensibly and moderately. The average holding value is just £300 and those who have bought crypto tend to be further up the income scale, which means they have greater capacity to sustain losses. A high proportion of consumers recognise cryptocurrency is a gamble and a growing number are using it as part of a wider investment portfolio, which indicates they understand the risks and how to mitigate them.”
However, Khalaf adds that there is a more ominous aspect to the research’s findings.
“The fact that 14% of crypto buyers have borrowed to invest is simply terrifying. 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. Around one in five crypto buyers said they were driven by FOMO, which is never a good motivation for financial decisions. A similar proportion said they were buying crypto instead of shares or other investments, which suggests some consumers are leapfrogging traditional assets which can help to build long term wealth.”