Cryptocurrencies Are Ill-Suited For Retail Investors - Article Says So. The article says that Cryptocurrencies are "extremely volatile" and not suitable for retail investors. The article also claims that Cryptocurrencies are illiquid and not suitable for the average investor. But, is that true? It is possible that the article is merely a bit exaggerated or does it represent a broader trend?
Cryptocurrencies Are "Ill-suited" to retail investors
The Financial Conduct Authority (FCA) has ruled that crypto-based products are "ill-suited" for retail investors. The FCA says that this ban is based on the complexity of cryptocurrency-based financial products, their volatility, and a lack of reliable valuations. It hopes to discourage investors from making unwise decisions.
While institutional investors have been increasingly interested in cryptocurrencies, retail investors have been slow to catch on. The UK's Financial Conduct Authority (FCA) has banned the sale of cryptocurrency derivatives, which it considers 'ill-suited' for retail investors. In addition, the UK government has outlined plans to crack down on cryptocurrency investment schemes that mislead retail investors. This means that investors cannot buy cryptocurrencies on regulated exchanges, like those in the U.S.
The FCA says its new rules are necessary to protect retail investors and prevent them from losing money. Crypto derivatives are a major source of risk for retail investors. The FCA's proposed ban on crypto derivatives is set to go into effect on January 6, 2021.
They are "highly volatile"
There's no denying that Bitcoins are "highly volatile," but that doesn't mean that they are unprofitable. The volatility is due in part to the fact that cryptocurrencies are new concepts. It takes time for new ideas to settle and gain acceptance. The cryptocurrency market is still in the early stages of price discovery.
While the erratic behavior of Bitcoin is not surprising, the price fluctuation is still scary for the average person. However, those with extensive trading experience usually look at these massive retracements as buying opportunities. And if you're new to trading in the cryptocurrency market, it might be better to get used to volatility, rather than panic.
The biggest issue with cryptocurrencies is that they have no intrinsic value and, as such, are difficult to value through fundamental analysis. As a result, investors are largely staying away from them. This means that these assets are dependent on individual investors around the world. These individuals usually don't hold the assets themselves, but they do take a long-term view and may hold them for years at a time. This means that investing in cryptocurrencies is a high-risk endeavor.
