Bitcoin is not an asset class and has no place in small investors’ portfolios. This warning was issued by Hargreaves Lansdown, the largest investment platform in the UK. On Wednesday, a four-year ban preventing small investors from buying exchange-traded notes (ETNs) linked to crypto assets was lifted in the UK. This was reported today by CNBC.
Hargreaves Lansdown warns against cryptocurrencies
“We believe that cryptocurrency does not have the characteristics that would make it suitable for inclusion in portfolios for growth or income. Clients should not rely on it to help them meet their financial goals,” the company said. “The performance assumptions for cryptocurrencies cannot be analyzed, and unlike other classes of alternative assets, they have no intrinsic value,” it added.
Only professional traders could buy ETNs linked to crypto assets in the UK, as a ban issued by the Financial Conduct Authority (FCA) prevented small investors from doing so. When British officials announced earlier this year that the ETN ban would be lifted, they argued that it would support the growth and competitiveness of the British crypto industry. Cryptocurrency companies called it a major breakthrough for the sector in Britain.
Hargreaves Lansdown has not ruled out offering cryptocurrencies on its platform. It argues that some customers will want to speculate on cryptocurrency products and that it will allow some people access to the products from the beginning of next year, once it has assessed whether they are suitable for them, according to the Financial Times (FT) website.
Bitcoin from humble beginnings to record value
Cryptocurrencies, which are decentralized and therefore not regulated by central authorities such as governments, have their critics. In addition, their prices fluctuate significantly. In 2022, investors lost $2 trillion during the so-called cryptocurrency winter. Bitcoin is the most traded cryptocurrency, and those who bought it early can make huge profits.
Bitcoin was created in 2009 as an alternative to official currencies. It is based on blockchain technology, which is a decentralized ledger that allows data, not just cryptocurrencies, to be sent transparently and securely. In 2010, bitcoin was worth less than a dollar, but now its price exceeds $120,000.
Source: Reuters
