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The FCA Made a Cryptocurrency CFD risk warning.
Bitcoin CFD
With the boost of cryptocurrencies attention in the financial market, a notice has been published to speculators. The UK regulatory body prompted caution to speculators by showcasing the pitfalls of making an investment in cryptocurrency CFDs. .
Earlier this year, the British regulator has notified market players relating to the risks related to ICO. Subsequent this warning, the FCA at the present issues a warning related to cryptocurrency contracts for differences (CFDs), recommending investors to take extreme caution as such products are intensely risky.
The UK Financial Conduct Authority (FCA) warned traders stating that CFDs with cryptocurrencies as the underlying investment are risky assets.
The warning exposes:
“Contracts for differences (CFDs), including financial spread bets, with cryptocurrencies as the underlying investment, are increasingly being marketed to consumers. These products are extremely high-risk, speculative products. This warning is to inform consumers about the risks of buying them.”
The FCA has also warned investors a few weeks back regarding cryptocurrency CFDs as a good number of online derivative providers in UK are now permitting Bitcoin and Ethereum trading on their platforms.
The FCA regulates The UK's Financial markets, including cryptocurrency CFDs and presents all sort of protection to the investors. CFDs allow traders to speculate on the changing price of an asset. Traders often enjoy leverage during the investment in the CFDs. Nonetheless, the FCA reestablishes that trading cryptocurrency CFDs are risky and highly high-risk investments because of their unstable dynamics.
In a large number of occasions, crypto tokens have displayed movements of more than 30 percent and in some cases even 50 percent of their prices. :
“We are concerned about the growth in retail clients trading in CFDs, particularly those offered with a cryptocurrency as the underlying asset… The price volatility of the asset comes with significant risks to retail investors.”
Bitcoin prices have been really volatile in recent several weeks striking highs of almost $19,000 before falling to 7500 in a short time.