The cryptocurrency boom and the risks for investors
In recent months, the cryptocurrency market has experienced an unprecedented surge, with values that have reached historic peaks. Bitcoin has crossed the 100,000 dollar mark, while Ethereum has seen a significant increase, from 3,000 to 4,000 dollars. This enthusiasm has attracted the attention of many investors, but ESMA, the European Financial Market Supervisory Authority, has issued a clear warning: the risks associated with buying crypto-assets are high
and should not be underestimated.
The volatility of crypto-assets
The highly volatile nature of cryptocurrencies is one of the main reasons for concern. ESMA emphasized that the current price increase could only be a temporary phenomenon, suggesting that investors think carefully before making financial decisions. It’s crucial to consider your needs and objectives, as the cryptocurrency market can experience rapid and unpredictable fluctuations. Investors must be prepared to lose their entire invested capital, a risk that is not present in a similar way in traditional markets
.
The MiCA Regulation and investor protection
On December 30, the Crypto-Asset Markets Regulation (MiCA) will come into force, which aims to provide greater protection to investors. However, it’s important to note that this regulation does not eliminate all risks. Unlike traditional investment products, crypto-assets don’t benefit from an investor compensation system. This means that, in the event of the bankruptcy of a crypto-asset service provider, investors may not be entitled to compensation, further increasing the
risk of loss.
Beware of scams and unauthorized operators
Another critical aspect highlighted by ESMA concerns the risk of scams and fraud, in particular when interacting with unauthorized operators in the European Union. Investors need to be extremely cautious and always verify the reliability of crypto-asset service providers. ESMA warns that services provided by unauthorized operators are not covered by the MiCA regulation, leaving investors vulnerable to potential losses without any form of
legal protection.
Advice for investors
If you’re considering investing in crypto-assets, ESMA recommends following some fundamental guidelines. First of all, it is essential to be properly informed about the risks and specific characteristics of crypto-assets. In addition, it is advisable to invest only amounts that you are willing to lose and to diversify your portfolio to mitigate risks. Finally, it is essential to constantly monitor the market and stay updated on regulations and any changes that could affect the cryptocurrency sector.