SEC warns about Bitcoin due to its volatility

TL;DR Breakdown

• SEC warns investors about volatility in cryptocurrencies.
• Bitcoin recovers 42% of its value after reaching its all-time high in April.

The largest market regulator in the United States, SEC, has warned traders about using Bitcoin and its future volatility. Regulators claim that any national body does not approve the crypto market, while it is also volatile and exposed to fraud.

SEC issued a notice urging future crypto traders to analyze the risks and rewards. In addition, all those considering future funds in Bitcoin should know the investment potential.

SEC urges avoidance of future investments in Bitcoin

Bitcoin

The regulatory authority said investors should consider the “asset” volatility year round. They also got exposure through the futures market regarding Bitcoin. The announcement ended when the securities and exchange commission dismissed cryptocurrencies as highly speculative assets.

Traders should understand that the cryptocurrency is not regulated by the authorities and is prone to virtual fraud. The token futures market is also not straightforward because it can be manipulated. Futures correspond to contracts that traders make to determine what the future cryptocurrency price is.

This Bitcoin futures market has gained fame since the cryptocurrency crash. It is quite a speculative system in which the investor could predict that BTC will hit $100,000 by the end of the year or a slightly more credible value and hedge bets against this prediction.

SEC focuses on cryptocurrencies

The SEC has focused its eyes on cryptocurrencies since their price soared in early 2021. Virtual currencies reached their all-time high in the first five months of the year until plummeting at the end of May.

For now, Bitcoin is trading at $37,500, which corresponds to a loss of 42% of its value from its all-time high. This has shown any new traders on the block what cryptocurrency volatility looks like. Chinese regulators acted against the token by banning its commercialization after seeing such a huge loss.

However, crypto investors think these warnings from the SEC are exaggerated and baseless. Just as the market is speculative, the value of the cryptocurrency also has an uncertain side. BTC may rebound from this drastic drop and reach or exceed the all-time high achieved in April.

Interestingly, a lot of people support cryptocurrencies and try to strengthen their market with new applications. Since its inception, the SEC has been against cryptocurrencies, but they have increased the pressure in this New Year.

Regardless of how regulators, central banks, and governments disapprove of the virtual market, cryptocurrency will continue to function. This loss in BTC value has also opened up the possibility for the market to grow with new investments. Traders have taken advantage of the situation to buy the crypto at a lower price, with plans of making a lot of money with an expected increase in price at the end of the year.

About the author