The latest market fluctuations worried Bitcoin investors. The Central Bank of England also states that cryptocurrency could easily be worth zero and that investors should be careful and aware of risks.
Those Invested in Digital Currency Could Lose Everything
The Central Bank of England released a warning of the potential risk for investors, where it questioned whether there is inherent worth of the most prominent cryptocurrency, Bitcoin.
As Bitcoin suffered a sell-off because of the latest Omicron variant of COVID-19, the deputy governor, Sir Jon Cunliffe, stated that the Bank had to be prepared for the risks. According to Cunliffe, Bitcoin could also practically drop to zero.
Regardless, the market cap of the cryptocurrency grew tenfold starting in 2020. Additionally, 0.1% of UK households’ wealth is in cryptocurrencies, an integral part of their portfolios. That’s 2.3 million crypto holders, averaging at £300 each.
The Bank also said that major institutions should be careful when adopting crypto. At the same time, it calls for improved domestic and global regulations. The Bank believes that these regulations could influence the development of the market, encourage sustainability, and maintain integrity in this financial system.
Furthermore, another member of the Bank’s staff stated in a separate blog post that Bitcoin failed to fulfill many features required of a currency. For example, Bitcoin isn’t used to price other things besides itself.
Additionally, when all Bitcoins are mined, it could be harder to support its system. This could lead to a price drop, and investors should be ready to lose everything.