Major Swiss bank warns of total loss through Bitcoin

Major Swiss bank warns of total loss through Bitcoin and Co.

In a recent article, the major Swiss bank UBS warns of risks and a possible total loss through investments in Bitcoin and other cryptocurrencies.

On 14 January, the major Swiss bank UBS published a warning against investments in Bitcoin and other cryptocurrencies like Cryptosoft in view of the current price development.

Great customer interest

According to its own information, many clients are currently approaching UBS with the question of whether they should invest in Bitcoin or other cryptocurrencies. In its letter, the major Swiss bank therefore takes a general position on the current market situation and the general risks of cryptocurrencies.

On the possibility of a further positive price development for Bitcoin and Co, UBS writes:

„Although we would not rule out further price increases, we are somewhat sceptical about fundamental use cases in the real world. This makes it difficult to determine a fair value for Bitcoin and other cryptocurrencies. We are also aware of the risk of a total loss of the entire investment.“

In the context of a current large price momentum, prices could indeed rise further in the near future, „as well as because of the potential for increased activity by institutional participants, due to the enormous media and social media attention, and the expectation that limited supply will lead to higher prices.“

However, past success is no guarantee of future success, UBS added. Rather, it sees the risk of a total loss, potentially also due to increased regulation. The bank writes in this regard:

„In our view, there is little to stop the price of a cryptocurrency from going to zero if a better-designed version [cryptocurrency] comes to market or if regulatory changes dampen sentiment.“

Regulators‘ attention also increases sharply with rising prices and higher market capitalisation. In this context, UBS points to a decision by the UK’s Financial Conduct Authority (FCA) to ban the sale of certain crypto derivatives to retail clients. Something similar could also happen in other countries.

BaFin also warns against Bitcoin hype

Just a few days ago, the German Federal Financial Supervisory Authority (BaFin) also published a warning about the risks of investing in crypto assets like Bitcoin. The German financial market watchdogs also see the possibility of a total loss with Bitcoin and Co.

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