By Samuel Indyk
Investing.com – Around 7% of adults in the Britain have bought cryptocurrencies in the last year, according to a survey conducted on behalf of investment platform AJ Bell. That is more than the 5% of Brits who invested in a stocks and shares ISAs, according to data released by HMRC last week for the 2019/20 tax year.
“When more people are buying cryptocurrency than investing in a stockmarket ISA, you have to conclude the world’s gone crypto crazy,” writes AJ Bell financial analyst Laith Khalaf.
“It’s possible that cryptocurrencies will ultimately prove to be profitable in the long run, though that’s still highly debatable.
“Meanwhile it’s hard to argue with historical performance data which shows an investment in the stockmarket has almost always paid off in the long term.”
The survey, carried out by findoutnow on behalf of AJ Bell, found that buyers of cryptocurrencies were predominantly male and under 35 years of age.
71% of those that bought cryptocurrencies said they made a profit. That news should not be surprising given Bitcoin’s 320% rally over the last year, while the second largest cryptocurrency, Ethereum, is up around 1000% over the same period.
12% of the survey respondents said they made a loss while 17% of those asked said they were unsure whether their cryptocurrency investments were in the black or red.
“Even those who have made money shouldn’t be complacent about the risks inherent in cryptocurrencies, as profits can be quickly wiped out by extreme price swings,” Khalaf added.
The results of the survey come as cryptocurrencies stand at a crossroads. Bitcoin has tumbled from a high of near $65,000 in April to its current price of around $40,000 as fears over slowing institutional adoption and increased global regulation have weighed on the cryptocurrency space.
However, there are signs that Bitcoin may have bottomed and a recent intervention from Tesla (NASDAQ:TSLA) CEO Elon Musk briefly took the price above $40,000. Musk said Tesla will again start accepting Bitcoin as payment for its vehicles once there is confirmation of reasonable clean energy usage by miners.
Separately, last week’s news that El Salvador was adopting Bitcoin as legal tender also helped provide a near term floor as bulls believe this justifies one of Bitcoin’s key use cases and gives weight to the argument that it might one day replace the US dollar.
Nevertheless, there is still a long way to go until this might be the case and for now, the price of Bitcoin seems more and more likely to be at the mercy of the tweets of Elon Musk than anything else.
“Musk’s twitterings are not insignificant, seeing as he is CEO of one of the world’s most valuable companies, however they are hardly a measure of wider business sentiment towards Bitcoin,” Khalaf said.
“That matters because a big part of the potential value of Bitcoin lies in its ability to be used as a medium of exchange.
“Ironically, as long as Bitcoin’s volatility continues to be heightened by something as extraneous and unpredictable as a tweet, it’s unlikely to find the firm foundations needed to genuinely bridge transactions between businesses and consumers.”
At 14:28BST, Bitcoin was trading just above $40,200 and is relatively flat over the last 24 hours.