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The Bank of England announced that bitcoin could become worthless and that people investing in digital currency should be ready to lose everything.
In a warning about potential risks to investors, the Bank questioned whether there is a natural value of the most prominent digital currency, the value of which has risen to close to $ 50,000 this year, British media report.
In early November, bitcoin reached a record value of $ 67,000, but then the value fell sharply after the news of the new version of the corona virus, Omicron, first appeared. Bitcoin stabilized just last week. Deputy Governor Sir John Canliff said the Bank should be prepared for the risks associated with cryptocurrency growth following its rapidly growing popularity.
“Prices can fluctuate significantly and bitcoin could theoretically or practically fall to zero,” he told the BBC. The capitalization of the cryptocurrency market has increased tenfold since the beginning of 2020 to about $ 2.5 billion, representing about 1 percent of global financial assets. About 0.1 per cent of British household wealth is in bitcoin and similar cryptocurrencies, such as ethereum and binance.
About 2.3 million people hold a cryptocurrency, averaging around 30 330 each. The bank’s financial policy board, set up after the 2008 financial crisis to monitor risk, said there was little direct threat to the stability of the UK financial system from cryptocurrencies.
However, the board warned that, at the current rate of rapid growth, such assets may be more closely linked to traditional financial services and are likely to pose a range of risks. Announcing the regular review of the state of the financial system, the Bank said that key institutions should carefully approach the adoption of cryptocurrencies and should pay close attention to their developments in the market.
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