We do think that crypto may be the future of money and assets. However, on the night of January 10-11, 2020, Bitcoin (BTC) and with it, most other cryptocurrencies took a massive hit after an irrational bull run. Some of the lost over 20%. Currently, prices are recovering somewhat, but this does not look too stable. Scott Minerd of Guggenheim Partners, who got massively into Bitcoin, has pointed out that the technical upside of $35,000 has been exceeded, and it is time for a correction. He is partially exiting. The UK FCA warns consumers against a naïve crypto investment approach.
In a Tweet a few hours ago, Scott Minerd argued that BTC’s “parabolic rise is unsustainable in the near term” and hence it’s vulnerable to a setback. The target technical upside of $35,000 has been exceeded and thus it’s time to take some money off the table.
The current ongoing correction may follow the pattern of 2017 where after the 2016 halving, the BTC price initially rose to just under $20,000 by the end of 2017. It then corrected by more than 50% and took until the end of 2020 to reach the 2020 peak. Within a few days, the price then exploded to almost $42,000 at the turn of 2020/21. Yes, a correction is due.
The UK Financial Conduct Authority (FCA) has again warned against high-risk investments in cryptocurrencies in light of the price plunge.
Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money.UK FCA Warning Against Cryptocurrency (Source: FCA News)
In addition to the already high risk of investing in this asset class, there are unfortunately also very many scams that deceive naive investors. A double risk that can easily overwhelm inexperienced crypto investors.