The Bank of England has said that bitcoin could be “worthless” and people investing in the digital currency should be prepared to lose everything.
In a warning over the potential risks for investors, the central bank questioned whether there was any inherent worth in the most prominent digital currency, which has soared in value this year to close to $50,000 (£37,786) a piece.
The cryptocurrency peaked above $67,000 in early November, but suffered a sell-off after news first broke of the Omicron variant of coronavirus, before stabilising around its current level in the past week.
The Bank’s deputy governor, Sir Jon Cunliffe, said it had to be ready for risks linked to the rise of the crypto asset following rapid growth in its popularity. “Their price can vary quite considerably and they [bitcoins] could theoretically or practically drop to zero,” he told the BBC.
The market capitalisation of crypto assets has grown tenfold since early 2020 to about $2.6tn, representing about 1% of global financial assets. About 0.1% of UK households’ wealth is in bitcoin and similar crypto assets, such as ethereum and Binance coin. As many as 2.3 million people hold crypto assets, at an average amount of about £300 each. » | Richard Partington, Economics correspondent | Tuesday, December 14, 2021
