While some see bitcoin ETFs as a sign of legitimacy for the sector, the Central Bank of Ireland (CBI) has issued a stark warning to consumers.
They emphasize the risks associated with scams and the extreme volatility of the cryptocurrency market, stating that consumers could lose all their money if they invest in crypto. Additionally, they advise consumers to be cautious of offers that seem too good to be true, as they are likely scams.
Central Bank of Ireland’s Crypto Risk Warning, Amid Crypto Price Surge
Irish consumers are being warned about the risks associated with purchasing cryptocurrencies like bitcoin, despite the recent surge in their prices attracting renewed investor interest.
Bitcoin, the most renowned cryptocurrency, achieved an all-time high on Wednesday, propelled by a significant influx of funds into US exchange-traded funds (ETFs) linked to the digital asset.
Many buyers are attracted to bitcoin due to its perceived scarcity, even though its practical utility is limited. The increased investment in the crypto sector, including from financial institutions, has been spurred by regulators permitting cryptocurrency access to established US ETF markets.
The sharp increase in cryptocurrency prices is drawing in more buyers, fueled by a fear of missing out (FOMO) and the desire to capitalize on the upward trend.
CBI’s Warning
The Central Bank of Ireland (CBI) is cautioning potential cryptocurrency investors to evaluate their capacity to handle potential losses. They emphasize the speculative nature of crypto investments and their susceptibility to sudden price fluctuations.
The CBI also highlights the prevalence of unverified advertising claims and scams within the crypto space, advising individuals to be wary of organizations or individuals promising quick returns or pressuring them to invest hastily.
Despite the warnings, there is a surge in demand for physically-backed ETFs linked to cryptocurrencies, driven by limited market depth and the rush by ETF issuers to fulfill orders.
The rush by ETF issuers to acquire bitcoin to back their products has led to a decrease in available supply. Consequently, the scarcity of bitcoin is increasing as large quantities are being obtained to meet the demand for ETFs.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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