UBS Compares Crypto to MySpace, Says Prices Could Go to Zero

The giant financial services company UBS Wealth Management is the latest organization to warn investors about the potential risks of the cryptocurrency industry. The entity has issued guidelines indicating that the price of each digital asset could plummet to zero at any point, and people need to be prepared to lose it all.

UBS Wealth Outlines Crypto Risks

The Switzerland-based giant wealth manager issued a warning aimed at investors cited by Bloomberg. It reads that despite the recent bullish trends within the digital asset field in which most cryptocurrencies skyrocketed in a relatively short time, investors should be prepared that they “could still lose all their money.”

UBS Global Wealth Management highlighted that the industry is still largely unregulated and could recently face competition from central banks in the face of CBDCs.

“There is little in our view to stop a cryptocurrency’s price from going to zero when a better-designed version is launched or if regulatory changes stifle sentiment. Netscape and MySpace are examples of network applications that enjoyed widespread popularity but eventually disappeared.” – wrote the Chief Investment Officer for global emerging markets, Michael Bollinger.

The entity also questioned the narrative that cryptocurrencies are indeed used for payments and said that most people still tend to go with fiat currencies.

Although UBS admitted that price could still increase in the short-term, the report advised that investors “must limit the size of their investments to an amount they can afford to lose.”

 Financial TimesUBS Global Wealth Management. Source: Financial Times

Regulators Warn As Well

It seems that the parabolic price increase in the past several months has caught the attention of regulators as well. CryptoPotato reported earlier that the UK Financial Conduct Authority (FCA) and the New Zealand Financial Markets Authority (FMA) published similar warnings in the span of a week.

The FCA focused on potential threats coming from unregulated companies and projects that offer “too good to be true” returns on cryptocurrency investments. On the other hand, the FMA outlined the notorious volatility in the crypto market, saying that assets could plummet by double-digits in just a day.

Interestingly, both watchdogs, similarly to UBS, said that investors should be ready for a worst-case scenario in which they “lose all money” allocated into digital assets.

Featured Image Courtesy of CGNT

Publication date: 
01/16/2021 - 01:30
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