Despite Bitcoin’s dramatic fall, which saw prices drop from $20,000 to $3,000 throughout 2018, UK consumers continue to invest in cryptocurrencies as a way to “get rich quick”, according to regulatory body the Financial Conduct Authority (FCA).
In its new report on attitudes towards cryptoassets, which a quizzed a “nationally representative” sample of 2,132 UK consumers, the FCA found that many were being influenced by friends, acquaintances and social media personalities to invest in cryptocurrencies.
Despite this, 16% of those surveyed that had previously purchased cryptocurrency assets said that they had completed no prior research into assets like Bitcoin before investing, and just 8% said that they had conducted deep research. Some 50% of investors were convinced after reading about cryptocurrencies online, while a further 25% were convinced by discussions with friends and colleagues.
The FCA is concerned that consumers may be unaware of the risks associated with investing in the largely unregulated cryptocurrency market, which is prone to frequent price dips.
“The results suggest that although cryptoassets may not be well understood by many consumers, the vast majority don’t buy or use them correctly,” said Christopher Woolard, Executive Director of Strategy and Competition for the FCA. “Cryptoassets are complex, volatile products – consumers investing in them should be prepared to lose all of their money.”
The volatility of the cryptocurrency market aside, lacking regulation also means that investors are at risk of falling victim to cyberattacks and exit scams. Earlier this week it was announced that the cold wallets belonging to crypto exchange QuadrigaCX were emptied months before the death of its owner Gerald Cotten, leaving those that held assets in the exchange unable to access their funds.
Are consumers still interested in the crypto market?
Despite the hype that Bitcoin generated heading into 2018, interest in cryptocurrencies among the general population seems to have dipped drastically since.
Just 7% of those that have yet to gamble on the cryptocurrency market said that they would probably invest at some point in the future. The study found that consumers were being put off by fluctuating prices and a lack of understanding of how cryptocurrencies work.
This follows recent findings that 47% of Europeans are unconvinced that cryptoassets could provide a return on investment in the future.
Of those that purchased Bitcoin and other assets, more than a third of them have never checked on the value of their investment, while just 22% stated that they regularly check on the value of their assets. Almost one in ten were unaware whether they had made or lost money on their investment.
Despite that, those that have bought in do not regret their decision, with just 11% expressing regret at having ever bought cryptoassets. The vast majority suggested that they were aware of the risks and were willing to gamble on the future success of cryptocurrencies.