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Nearly 40% of UK crypto investors have made 100%+ on cryptocurrency – FCA survey

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The UK regulator has published further research and analysis on how UK investors treat cryptocurrencies, data which is of especial importance as it will shape the way the FCA will develop its oversight policy for the asset class.

The results also make interesting reading from the perspective of investors, as they show just how far cryptocurrencies have come already in terms of use by retail traders.

Awareness of cryptocurrency continues to expand

The FCA noted that 78% of adults have now heard of cryptocurrency, up 5% from last year. The total number of UK residents holding cryptocurrency has risen to 2.3m people. The median holding, however, is valued at between £260 and £300. The typical investor is largely male, and mainly over the age of 35.

Predictably, most investors are aware of Bitcoin (82%). This far outranks any other cryptocurrency in the profile stakes. What we found interesting was that there was less awareness of many other coins compared with previous surveys, with the exception of Bitcoin Cash. Having said that, when the FCA drilled down into which cryptocurrencies investors owned, 66% held Bitcoin, 35% held Ethereum, 21% Litecoin and 18% owned XRP/Ripple.

It is also interesting that 96% of UK crypto investors knew they had no financial protection for their crypto assets.


Investors don’t view cryptocurrency as a gamble

The FCA said that consumers were less likely to consider cryptocurrency investment as a gamble than they were previously, but most – 62% – who own cryptocurrency are looking at it as an alternative or complement to mainstream investments.

Most consumers will use an exchange to purchase cryptocurrencies, and will pay for it using their own disposable income. A considerable number now check their balances every day, up from 13% to 29% since the last FCA survey. About half of cryptocurrency owners said they planned to buy more, while a similar proportion said that they knew they would make money at some point.

By contrast there is limited enthusiasm for stablecoins as 46% of crypto users are simply unclear on their benefits.

Listen: Podcast with Stephen Ehrlich, CEO of Voyager Digital, on trading and investing in cryptocurrencies

UK investors are making money from crypto

When it comes to measuring gains and losses from trading cryptocurrency, most Brits told the FCA they had made money, in many cases quite a bit. Nearly 40% have more than doubled their money trading cryptocurrency. Another 11% reported they had made between 51% and 100% returns. A relatively small number had lost money. Also of interest is that 7% have no idea what the value of their crypto holdings is!

What is also intriguing is that the vast majority of cryptocurrency traders do not see crypto as a replacement for mainstream financial markets, which flies in the face of the rhetoric The Armchair Trader hears from the pro crypto lobby. Thirty per cent are investing as part of a wider portfolio, while 19% said they were buying crypto instead of investing in shares or other financial investments. The number of people who believe that cryptocurrency investing is better than investing in mainstream financial markets is increasing however, despite 22% having had a bad experience of some kind while trying to invest in cryptocurrencies.

Most investors continue to store their cryptocurrency on the exchange they bought it from, demonstrating the importance of exchanges to the FCA within the cryptocurrency ecosystem. If the FCA were to move to regulate cryptocurrencies, we think the exchanges will be the first point of action. Over half of crypto users have still not sold any of their cryptocurrency holdings, and 5% reported they had tried and failed to do so, again highlighting potential issues of concern with exchanges.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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