Buying Crypto Is Like Pinning A Donkey’s Tail

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Ma Solana pump is not a phrase you would expect to hear at school gates, but last year the playground chat was full of crypto speculation. Parents piled in, gossip about PTA electric trips and rising house prices forgotten, for stories of big wins in the crypto wild west.

And it wasn’t at a private school in the stockbroker’s belt, but at a regular public elementary school in the Southwest, albeit in a relatively affluent area. In secondary schools, it is apparently the teenage students who trade crypto, much as they once traded football stickers.

After spending the wee hours staring at larger screens compiling my morning market reports, phones were thrown at me at the classroom door, showing the rapid rises in coins and tokens.

Had these crypto newbies researched what they were buying? Rarely. They were funneling their money to coins and tokens that had made the biggest gains, guided by superstar social media experts.

As their children played with imaginary lightsabers, these parents displayed the full force of FOMO. The fear of missing something was strong in them. My pleas to stop, watch and listen to warnings from the Financial Conduct Authority have gone unheeded. My attempts to get them to consider less risky investments were largely ignored. Only one friend cashed in before the crash which, when it happened, was spectacular.

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Bitcoin and other cryptocurrencies are expected to rise again, like a phoenix from the ashes of this latest crash and burn. It is hoped that, much like the dot.com boom, survivors could be the tech stars of the future.

But just as favorite reach for the moon was beaten at Ascot, they could also disappoint. It is often said that investing in crypto is like supporting a horse. But unlike horse racing, which has a history dating back centuries, the rules of the crypto game have yet to be written.

Regulators around the world have not decided how digital currencies should be controlled and what role stablecoins and central bank digital currencies will play. Until they do, speculating in crypto is more like a game of pinning the tail on the donkey.

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Regulators need to move on and try to lift the blindfold that leaves so many crypto holders in a dark alley of despair as the losses mount.

In 2021, around 2.3 million Britons held some form of cryptocurrency and a frightening 14% of holders had gone into debt to speculate.

Big City voices tried to grab the megaphone to warn crowds of speculators, and particular anger was reserved for celebrity mentions. When the head of the Financial Conduct Authority spends his time following the Kardashians, it’s clear that the collision of fame and crypto is concerning.

(Ms. Khardashian West alongside Kim Kardashian and boxer Floyd “Money” Mayweather Jr are among those prosecuted in the United States for alleged false statements promoting the EthereumMax cryptocurrency.)

Outgoing FCA Chairman Charles Randall reserved part of his speech for reality TV star Kim, saying his Instagram story plugging in a cryptocurrency may have been the “financial promotion with the biggest audience in the world.” ‘story”.

It was feared that speculation had reached such a high level last year that a crypto ticking time bomb was spinning. Unregulated crypto assets fell from $16 billion in 2016 to $2.3 trillion in October.

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But the crash erased more than $1 trillion from the value of Bitcoin and other currencies.

It has also delayed government plans to make the UK an investment hub for cryptocurrencies and its innovations. Ministers have high hopes of making the UK tax system more competitive to encourage further development of the crypto asset market.

But if the highly experienced management consultants advising big corporations on how to operate in this brave new world don’t yet understand the rules of engagement, how are ordinary bettors supposed to protect themselves from further financial damage? .

Until crypto is no longer a game of chance, investors should treat this sharpest currency speculation with caution and only be interested in the margins of any portfolio, with cash they are ready. to loose.

But if parents want to discuss interest rates, inflation, and the impact on business, mine is a cinnamon cappuccino. But it will have to be fast, because these screens are beckoning.

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