• One in 20 UK adults have bought cryptocurrencies
• Almost one in 10 people bought cryptocurrencies with borrowed money
• More than a fifth bought crypto because of FOMO
• A third of people have been encouraged by ads to buy
Laura Suter, personal finance analyst at investment platform AJ Bell, comments on the latest research from the FCA on cryptocurrencies:
“People have flocked to cryptocurrencies in the past year, and more than one in 20 people in the UK have bought cryptocurrency at some point – showing just how commonplace these relatively niche currencies have become. The number has boomed in the past year despite Bitcoin, the most common cryptocurrency, having dropped in value.
“While lots of people buying cryptocurrencies know the risks involved, there are still a large number of uninformed ‘investors’ who think they have protection or have been lured in by adverts offering impossibly high returns. One in 10 people who’ve bought cryptocurrency think that they are protected against losses, in a similar way to their money in the bank. Meanwhile, more than a third said that an advert had encouraged them to buy, with those people being less likely to understand the risks involved and more likely to regret buying cryptocurrencies. This highlights that a crackdown on cryptocurrency advertising, particularly on social media, would prevent more vulnerable people from buying and protect them from losses.
“What’s more, the research highlights that almost one in 10 people who buy cryptocurrencies are borrowing money to do so – a large leap from last year when no one said they had borrowed to buy. What’s worse is that this group are also less likely to understand the basics of how the currencies work – meaning they are in danger of the largest level of harm as they don’t understand the risks involved and can’t afford to lose money, particularly as they will be paying interest on the borrowed cash.
“But fortunately many understand that crypto is highly volatile and unlikely to make them money overnight, with almost half saying they bought it as a gamble rather than seeing it as a sure-fire way to generate returns. However, a quarter of people considered it an investment, alongside their other holdings, while more than a fifth of people bought it because they didn’t want to have FOMO (fear of missing out), which is not a reason for anyone to part with their money."
