- One of the world’s largest banks, UBS, has warned investors about Bitcoin, claiming that the crypto bubble will soon burst after the regulators crack down on it.
- The bank believes what is happening in China provides the best glimpse into the future of crypto and expects the US and UK to follow suit.
One of the largest banks in the world is warning investors not to invest their money in Bitcoin and other cryptocurrencies. UBS, the largest bank in Switzerland, expects the cryptocurrency bubble to burst soon. It pointed to the crackdown on miners and cryptocurrencies in China as a reminder that their place in the economy is constantly threatened and investors could lose all of their money if regulators continue crackdown. The warning comes despite the bank’s research into Bitcoin products for its wealthy customers.
In a notice to investors, UBS identified the action in China as one of the greatest threats to the future of Bitcoin. The Asian country has cracked down on miners, resulting in the largest mining difficulty adjustment in Bitcoin’s history.
In addition, as we reported, China is also taking action against crypto. The country’s central bank recently warned banks not to process crypto-related payments.
READ ALSO: China Orders Major Financial Institutions To Close Crypto-Related Accounts
UBS expects China to lead the raid, but other western countries will soon follow suit. The bank specifically named the US and UK as the next two countries likely to crackdown on the industry.
Regulators have shown that they can and will crack down on crypto. Therefore, we encourage investors to stay clear and build their portfolio around less risky assets. We have long warned that changing investor sentiment or regulatory crackdowns could burst bubble-like crypto markets.
UBS: Crypto is speculative and a risk for investors
The Swiss bank considers the crypto industry to be too risky for investors, including professionals. Despite the possibility of higher returns than most traditional capital markets, it is still too risky, the note says
Even if we cannot rule out future price gains in cryptocurrencies, we see this as a speculative market that harbors significant risks for professional investors.
And it’s not just the risk posed by cryptos that UBS has tampered with. The bank also sees some of the practices in the industry at odds with normal capital market practices.
Crypto trading practices, like expanding 50x or 100x leverage, appear to be fundamentally at odds with mainstream financial regulation.
Despite all of the downsides of crypto, UBS is researching Bitcoin for its wealthy clients. As we reported, the bank is seeing increasing demand for Bitcoin from its customers.
Read more: Swiss banking giant UBS examines crypto investments for wealthy clients
UBS Group AG, with $ 1.1 trillion in assets under management, plans to give its wealthy clients exposure to #Bitcoin. to offer
– Documentation of Bitcoin 📄 (@DocumentingBTC) May 10, 2021