Traditional banks have warned cryptocurrency investors for years regarding the risks involved in crypto trading and investment. This time around, Swiss banking giant UBS believes that the recent regulatory crackdown could lead to the crypto bubble bursting.
Regulatory Crackdown Could Cause Crypto Bubble To Pop
Swiss banking giant UBS has warned its clients that the recent regulatory crackdown in the cryptocurrency market could pop bubble-like markets. Hence, advising its clients that Bitcoin is not suitable as a professional investment vehicle at the moment.
The bank made its thoughts known in a letter sent to its clients, pointing out that China’s latest crackdown has massively affected the prices of the cryptocurrencies. In recent weeks, the Chinese government has cracked down on crypto-related activities.
The Sichuan government became the latest province in China to ban cryptocurrency mining activities. The government cut off the power supply for 26 cryptocurrency mining farms and other smaller crypto miners. This led to a massive decline in Bitcoin’s hashrate over the past few weeks.
The move was followed by the People’s Bank of China directing banks and payment companies in the country to stop processing cryptocurrency payments. The move makes it almost impossible for Chinese traders to access cryptocurrencies easily.
In its note, UBS wrote, “Regulators have demonstrated they can and will crack down on crypto. So we suggest investors stay clear and build their portfolio around less risky assets.” The bank said it has warning investors regarding the regulatory crackdown and its pending effect on the cryptocurrency market.
UBS further cited the recent regulatory crackdowns in the UK and the US. In the UK, the FCA has toughened its stance on cryptocurrency exchanges, with Binance coming under fire and struggling to provide services to traders in the region.
Bitcoin’s Price Remains Below $35k
Bitcoin’s price remains in a bearish condition, down by nearly 50% from its all-time high. The leading cryptocurrency has been struggling in recent weeks and still remains below $40k.
UBS said it doesn’t rule out the possibility of Bitcoin’s price rising again soon. However, it deems the investment as speculative and doesn’t advise professional investors to invest in Bitcoin. The recent regulatory crackdown could be needed to make the cryptocurrency market more professional and get rid of the bad elements in the space.