[2021-01-11] Crypto traders could ‘lose all their money,’ UK watchdog warns

[figmentofmyass]

sorry if the headline comes off as FUD---i've just been seeing it everywhere today (bloomberg, the post, the guardian, etc) and thought the sentiment was too funny to ignore. what a bunch of wankers.

be prepared to lose all your money, guys!

Britain’s financial watchdog issued a dire warning to cryptocurrency traders Monday as Bitcoin took investors on another wild ride.

The UK’s Financial Conduct Authority said consumers who invest in the red-hot cryptocurrency market “should be prepared to lose all their money” because there are so many risks involved.

Firms promoting crypto investments may overstate the returns that traders will reap and understate the risks of the market, and investors who buy in are unlikely to have access to consumer protections if something goes wrong, regulators said.

“Consumers should be aware of the risks and fully consider whether investing in high-return investments based on cryptoassets is appropriate for them,” the agency, known as the FCA, said in the warning. “They should check and carefully consider the cryptoasset business involved.”

Institutional investors have helped drive up Bitcoin’s price in recent weeks amid growing perceptions that it offers protection against inflation and could even become an alternative to gold.

But the FCA cast cryptocurrencies broadly as risky, “speculative” investments that could empty retail traders’ pockets given how loosely regulated they are.

“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money,” the agency warned. “… As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply.”

https://nypost.com/2021/01/11/uk-watchdog-warns-cryptocurrency-traders-amid-bitcoin-volatility/

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[stomachgrowls]

Negative news/fuds/sentiments = Signal to Buy

Positive ones/fomo related = Signal to sell

This is what im doing and it do works fine. 

[cr1776]

Yeah, it is all over today, they said the same thing every time bitcoin had gone up since 2010.

Volatile, yes, but one long upward trend from less than a dollar.

[odolvlobo]

sorry if the headline comes off as FUD---i've just been seeing it everywhere today (bloomberg, the post, the guardian, etc) and thought the sentiment was too funny to ignore. what a bunch of wankers.

be prepared to lose all your money, guys!

I suggest that you wake up from your irrational exuberance. There is a good reason why the bitcoiners say, "Don't invest more than you are willing to lose."

What do you say to these people? https://bitcointalk.org/index.php?topic=5308605.0

So, yes, be prepared to lose all of your money.

[Lucius]

I completely agree that people should be warned about what they are getting into, because it is certain that a large part of those who invest in cryptocurrencies actually have no idea what exactly it is about. It's not just that many will burn out because of volatility (buy high, sell low in panic), but the fact is that investors are not prepared for all the challenges that come with such an investment.

Until (if ever) we get people out of their heads that BTC is not some magic money (as unfortunately some promote it), there will unfortunately be many more who will have a bitter taste in their mouths after a day like yesterday - not to mention phishing, fake wallets, various types of cryptoscams ...

[acquafredda]

I am not surprised at all, because we saw this already in 2017-2018. Do you remember what happened then? People were taking out loans to buy BTC (during a bullrun driven by FOMO etc...)
https://www.bloomberg.com/opinion/articles/2017-12-20/start-worrying-when-investors-borrow-to-buy-bitcoins
The article is very crappy, but I wanted to point out the fact that those who borrow to buy btc during these crazy market phases are wordless.

[Kakmakr]

A lot of these entities are only saying this now, because they want to be in the position to say.. "We warned you" if something bad happens in the future. These same warnings floated around when the Bitcoin price was at $18 000 and look what happened now. 

If you ignore the risk .... you are stupid, because Crypto currencies are a high risk investment... but you can still have a balanced portfolio with some exposure to high risk investments ....without risking everything. 

[cr1776]

sorry if the headline comes off as FUD---i've just been seeing it everywhere today (bloomberg, the post, the guardian, etc) and thought the sentiment was too funny to ignore. what a bunch of wankers.

be prepared to lose all your money, guys!

I suggest that you wake up from your irrational exuberance. There is a good reason why the bitcoiners say, "Don't invest more than you are willing to lose."

What do you say to these people? https://bitcointalk.org/index.php?topic=5308605.0

So, yes, be prepared to lose all of your money.

What i would say to them is:  with a volatile thing like bitcoin, who would be crazy enough to gamble on the margin?  :-)  But you are right, don't invest more than you can afford to lose.  

Most importantly don't use margin in general because it is like playing with dynamite.  Margin with bitcoin is like playing with nitroglycerin, riding in a Jeep on a bumpy road while bees are flying in the vehicle.

They are right, you could lose all your money.  To me though, every year bitcoin has survived has increased the likelihood that it will be worth more vs zero.

[figmentofmyass]

Most importantly don't use margin in general because it is like playing with dynamite.  Margin with bitcoin is like playing with nitroglycerin, riding in a Jeep on a bumpy road while bees are flying in the vehicle.

They are right, you could lose all your money.

you can lose your shirt margin trading anything. forex traders are using 200-250x leverage vs the 3-10x that is typical with bitcoin, and the significant majority of them are consistently losing money. this is the most recent data from oanda:



so i'm perpetually annoyed by the emphasis on cryptocurrency and these canned pronouncements claiming that the lack of nanny state regulations is the problem. like, if we only had the correct consumer protections, it would save total degens from blowing up their trading accounts?! pffff. the FCA isn't capable of shit in that department. they're just blowing hot air to justify their existence.

[sunsilk]

This news is one of the reasons why we've been seeing a drop. The market is still dependent on the news that comes out. It is a mixed feeling when we see good news because we know that it will be followed by something bad and a drop like what we see.

Their words are for those people that have no idea what cryptos are. In the article, they've said that it's a high risk which we're all aware of and that's already peanuts to us since we've been here for years.

And just as they've warned, a flash crash came.

[cr1776]

Most importantly don't use margin in general because it is like playing with dynamite.  Margin with bitcoin is like playing with nitroglycerin, riding in a Jeep on a bumpy road while bees are flying in the vehicle.

They are right, you could lose all your money.

you can lose your shirt margin trading anything. forex traders are using 200-250x leverage vs the 3-10x that is typical with bitcoin, and the significant majority of them are consistently losing money. this is the most recent data from oanda:


so i'm perpetually annoyed by the emphasis on cryptocurrency and these canned pronouncements claiming that the lack of nanny state regulations is the problem. like, if we only had the correct consumer protections, it would save total degens from blowing up their trading accounts?! pffff. the FCA isn't capable of shit in that department. they're just blowing hot air to justify their existence.

Yeah, leverage is usually a very bad idea unless you are Warren Buffett and can withstand a huge drawdown.  You are right, the stupidity of equating it only to crypto is immense.

[acquafredda]

Most importantly don't use margin in general because it is like playing with dynamite.  Margin with bitcoin is like playing with nitroglycerin, riding in a Jeep on a bumpy road while bees are flying in the vehicle.

They are right, you could lose all your money.

you can lose your shirt margin trading anything. forex traders are using 200-250x leverage vs the 3-10x that is typical with bitcoin, and the significant majority of them are consistently losing money. this is the most recent data from oanda:



so i'm perpetually annoyed by the emphasis on cryptocurrency and these canned pronouncements claiming that the lack of nanny state regulations is the problem. like, if we only had the correct consumer protections, it would save total degens from blowing up their trading accounts?! pffff. the FCA isn't capable of shit in that department. they're just blowing hot air to justify their existence.

Heads up for the data! Can you please share the source as I would like to perform some more research on that? Thanks!
If that is the case, however, we can justify the emphasis on cryptocurrency simply because they are afraid of it, otherwise they would have to bark like dogs for what you have exposed likewise.

[cr1776]

Most importantly don't use margin in general because it is like playing with dynamite.  Margin with bitcoin is like playing with nitroglycerin, riding in a Jeep on a bumpy road while bees are flying in the vehicle.

They are right, you could lose all your money.

you can lose your shirt margin trading anything. forex traders are using 200-250x leverage vs the 3-10x that is typical with bitcoin, and the significant majority of them are consistently losing money. this is the most recent data from oanda:



so i'm perpetually annoyed by the emphasis on cryptocurrency and these canned pronouncements claiming that the lack of nanny state regulations is the problem. like, if we only had the correct consumer protections, it would save total degens from blowing up their trading accounts?! pffff. the FCA isn't capable of shit in that department. they're just blowing hot air to justify their existence.

Heads up for the data! Can you please share the source as I would like to perform some more research on that? Thanks!
If that is the case, however, we can justify the emphasis on cryptocurrency simply because they are afraid of it, otherwise they would have to bark like dogs for what you have exposed likewise.

Check out here, about 3 pages in:
https://www.oanda.com/register/docs/divisions/oc/risk_disclosure_agreement.pdf

[Theb]

You might see this as a negative comment but for me this is a fair statement coming from the government warning their citizens that they might lose their money especially right now when the price of cryptocurrencies are high, why? Because this is the time where crypto is hyped up and the newbies enter in the crypto market at not the best time possible where they are buying cryptocurrencies who have already taken off thus them having a portfolio without any kind of margin of safety. That fact combined that most of them don't have any trading experience at all is just a recipe for disaster which already happened during 2017 and it might happen again now where a lot of people think buying crypto and sitting down is the only thing they need to profit from it.

[Slow death]

unfortunately the authorities are right, they are talking about the whole cryptocurrency market and if we look at many altcoins where the person invests and days later it falls 100% then we can say that the authorities are right. About bitcoin we cannot deny the fact that it is a high-risk investment... on the day that bitcoin volatility is moderate I think that the authorities will encourage people to invest in bitcoin without much alarmism, I think this could happen from here to 3 years.

[DooMAD]

You might see this as a negative comment but for me this is a fair statement coming from the government warning their citizens that they might lose their money especially right now when the price of cryptocurrencies are high, why? Because this is the time where crypto is hyped up and the newbies enter in the crypto market at not the best time possible where they are buying cryptocurrencies who have already taken off thus them having a portfolio without any kind of margin of safety. That fact combined that most of them don't have any trading experience at all is just a recipe for disaster which already happened during 2017 and it might happen again now where a lot of people think buying crypto and sitting down is the only thing they need to profit from it.

I'd go a step further and suggest their advice is 100% accurate, but people seem to be misunderstanding what they meant:

“The FCA is aware that some firms are offering investments in cryptoassets, or lending or investments linked to cryptoassets, that promise high returns,” the regulator said on Monday.

“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,.”

(bold emphasis mine)

They're not referring to Bitcoin directly, but rather companies or websites that offer products or services based on crypto.  People should absolutely be wary of those.  They can lose all of their funds if the company in question turns out to be fraudulent.  Or indeed even if it's a legitimate company but makes risky investments using their client's wealth.

It's no different to when we tell people here on the forum to avoid cloud mining scams, ponzi schemes or HYIPs.  When you hand control of your money to others, you can easily get ripped off.

As usual, it's a case of the media skewing the emphasis, with the aim of greater sensationalism in order to generate more page clicks for their "stories".

[davidgdg]

I’ve seen these adverts. They offer returns of thousands of percent. They are quite obviously fraudulent. The response of the FCA is disgraceful. It should be prosecuting these people for fraud. Instead it grants them spurious respect by suggesting that they are just high risk investments. They are nothing of the sort. They are simply theft.

And of course it is worse than that.  The vagueness of the FCA warning suggests that investment in crypto assets generally is a bad idea for people with limited assets. To the contrary, it offers many of them the only prospect of getting out of poverty. Instead, the FCA seems to be determined to ensure that only the wealthy are able to invest in crypto. Whilst those who are most in need of joining the new world are excluded from it

[DooMAD]

I’ve seen these adverts. They offer returns of thousands of percent. They are quite obviously fraudulent. The response of the FCA is disgraceful. It should be prosecuting these people for fraud. Instead it grants them spurious respect by suggesting that they are just high risk investments. They are nothing of the sort. They are simply theft.

A national regulator tackling a global issue?  I suspect you're overestimating their powers.  The FCA's primary responsibility is to ensure registered companies conform to regulatory guidance in the UK.  They mostly deal with consumer protection and legitimate businesses.  If there's a random criminal on the other side of the planet trying to scam people, there is literally nothing the FCA can do about it.  Maybe you're thinking of Interpol or something?

Put the media spin to one side and try taking it directly from the horse's mouth and you'll see what they're actually saying isn't all that controversial.

//EDIT:  If you wanted to see exactly what they perceive as "outside the regulatory perimeter" (which is a fair amount) and they won't go anywhere near, see this document:
https://www.fca.org.uk/publication/policy/ps19-22.pdf