Andrew Bailey, Governor of the Central Bank of England, has warned Bitcoin investors of a looming crash. He dismissed claims that crypto has any intrinsic value.
Bailey has advised investors against purchasing cryptocurrencies. His warning comes at a time when crypto has gained a major boost from retail and institutional investors. According to Bailey, investors should only buy Bitcoin and other cryptocurrencies if they are prepared to lose all their money.
Have no Intrinsic Value
In the press conference, Bailey also stated that cryptocurrencies did not have intrinsic value. “Now that doesn’t mean that people don’t put value on them because they can have extrinsic value. But they have no intrinsic value.” He said.
Bailey also added that in his perspective, the words crypto and currency are not supposed to go together since the two have different values. It is not the first time that Bailey is criticizing cryptocurrencies. In 2017, during his tenure as the Chief Executive at UK’s Financial Conduct Authority (FCA), Bailey also warned investors about losing money held in Bitcoin investments.
In 2017, Bitcoin’s price drastically dropped from around $20,000 to $3200. However, such a crash is unlikely to happen now that institutional investors are also rallying up for Bitcoin.
Crypto Rally Raises Alarm
The unstoppable rally for Bitcoin, Ethereum, and other cryptocurrencies has made regulators worried about the increased risk of investors losing their investments. Crypto is also growing at an alarmingly high rate, and regulators can hardly keep up with regulating the sector.
The FCA has been working round the clock to protect crypto investors in the UK. The authority has also warned investors of the great level of risk that comes with investing in crypto.
While Bitcoin and Ethereum, the two largest cryptocurrencies globally, have gained investor and regulator confidence, other rising coins have been causing alarm. Dogecoin, a meme-based currency, is gaining popularity, having gained over 14000% since January. The crypto has risen to become the fourth-largest crypto in terms of market cap, and its value is rapidly increasing. However, the unstable condition of such coins and the possibility of ‘pump’ and ‘dump’ has regulators worried.
Some prominent investors who were once the greatest critics have changed tune and become its greatest supporters. Dan Schulman, PayPal’s CEO, had earlier dismissed Bitcoin as having any value, but he has now enabled a crypto-checkout service for PayPal users in the US. Besides, Wall Street banks have also started supporting crypto-backed services.