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The Union Bank of Switzerland is Cautious about Cryptocurrencies

Contributed by ICD Fiduciaries
09 July, 2021

The Union Bank of Switzerland has changed its attitude regarding investments in cryptocurrency: due to increasing regulatory restrictions and leverage effects abused by other players in the market banking group does not want to offer its clients investment solutions in cryptocurrency.

At the end of July several Switzerland bank warned about the risks of investing in cryptocurrency, outlining that Bitcoin's value had fallen for 55% comparing to it's peak 3 months ago in April. Although the rapid depreciation of the most emblematic of the virtual currencies has resulted in a return of buyers and its performance since the start of the year remains positive, UBS recommends that investors avoid this type of asset in their portfolio and prefer less risky technology stocks, for example, fintech. Moreover, they believe that the most recent China's crackdown will also leave an impact on cryptocurrency market.

Speaking about speculative leverage, it is important to point out theharmful trading practices. For example, the extension of leverage by factors 50 or 100 which is most-likely against with the current financial regulations. The bank advicesanyoneto be careful with investing in cryptocurrencies and follow the evolution of the market very closely before making any decisions. The same applies to other banks that does not offer investments in digital assets it may affect them in-directly. In addition, the cryptocurrency market is hard to predict and sustainable investment strategies are hard or even impossible to integrate.


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