Cryptocurrencies may prove unsuitable investment assets if regulators continue to put pressure on them, according to a warning from Swiss bank UBS to clients.
UBS management believes that the recent bans on cryptocurrencies in China have negatively affected not only their value, but also affected the activities of cryptocurrency firms. For example, in June, the People’s Bank of China (PBOC) banned banks from serving any customers working with digital assets.
According to analysts at UBS, if regulators continue to “push” cryptocurrencies, it will further aggravate the market. UBS fears that China’s actions will cause a domino effect, and financial regulators around the world will take similar measures, banning Bitcoin mining and cryptocurrency trading.
“Regulators have demonstrated that they can and will fight cryptocurrencies, so we recommend that investors not get involved in trading cryptoassets and include less risky assets in their investment portfolios. The digital currency market is highly dependent on investor sentiment, and any tightening of regulations could lead to bubbles, the warning says.
The bank’s specialists do not exclude a significant increase in the rate of cryptocurrencies. However, they called this market speculative, which carries significant risks for professional investors. UBS also said that investors should be particularly wary of leveraged cryptocurrency trading. According to the bank, increasing leverage by 50 or 100 times is fundamentally at odds with the principles of financial regulation.
In May, UBS announced plans to introduce special tools for investing in cryptoassets, as the bank’s clients showed increased interest in them. However, the bank made this announcement even before the introduction of severe restrictive measures in China. Note that UBS analysts have previously believed that Bitcoin will not be able to become a defensive asset due to its high volatility.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
