- One of the world’s largest banks UBS has warned investors against Bitcoin, claiming that the crypto bubble will pop soon following regulatory crackdown.
- The bank believes that what’s happening in China offers the best insight into what the future of crypto looks like, and expects the U.S and U.K to follow suit.
One of the world’s largest banks is warning investors against putting their money in Bitcoin and other cryptocurrencies. UBS, which is the largest bank in Switzerland believes that the cryptocurrency bubble will pop soon. It pointed to the crackdown on miners, and crypto, in China as a stark reminder that their place in the economy is constantly under threat and investors could lose all their money if regulators continue the crackdown. The warning comes despite the bank exploring Bitcoin products for its wealthy clients.
In a note sent to investors, UBS identified the crackdown in China as one of the biggest threats to the future of Bitcoin. The Asian country has clamped down on miners, leading to the biggest mining difficulty adjustment in Bitcoin’s history.
In addition, as we reported, China has been cracking down on crypto as well. The country’s central bank has recently warned banks against processing crypto-related payments.
UBS believes that while China may be leading the crackdown, other Western countries are bound to follow soon. The bank specifically cited the U.S and the U.K as the next two countries likely to crack down on the industry.
Regulators have demonstrated they can and will crack down on crypto. So we suggest investors stay clear, and build their portfolio around less risky assets. We’ve long warned that shifting investor sentiment or regulatory crackdowns could pop bubble-like crypto markets.
UBS: Crypto is speculative and a risk to investors
The Swiss bank sees the crypto industry as too risky for investors, even the professional ones. Despite the possibility of higher returns than most traditional capital markets, it’s still too risky, the note stated
While we can’t rule out future price gains in cryptos, we see this as a speculative market that poses significant risks to professional investors.
And it’s not just the risk that cryptos pose that UBS tore into. The bank also sees some of the practices in the industry as going against standard capital markets practices.
Crypto trading practices, such as extending 50X or 100X leverage, appear fundamentally at odds with mainstream finance regulation.
In spite of all the demerits of crypto, UBS is exploring Bitcoin for its wealthy clients. As we reported, the bank has seen a rise in demand for Bitcoin from its clients.
UBS Group AG, with $1.1 trillion of invested assets, plans to offer its wealthy clients exposure to #bitcoin
— Documenting Bitcoin ? (@DocumentingBTC) May 10, 2021