As Crypto prices plummet, our survey shows that 60% of UK investors used borrowed funds to buy their coins
Massive crypto losses over the last month
Ethereum – down 52%
Litecoin – down 51%
Ripple (XRP) – down 70%
Dodge Coin – down 89%
Cardano – down 73%
Solana – down 105%
There are many examples of those who have made their fortunes in the market, such as Ethereum’s creator, Vitalik Buterin, and Coinbase founder, Brian Armstrong, who became billionaires due to the exponential growth in the cryptocurrency industry in the last couple of years.
18 – 24: 70%
25 – 34: 64%
35 – 44: 68.9%
45 – 54: 62.5%
55 – 64: 45%
What type of credit facilities have people used to fund cryptocurrency investments?
When we break down what kinds of credit facilities people have used to purchase cryptocurrencies, over a third (35.5%) made their investment using a credit card. Almost a fifth (19.3%) funded the purchase out of their overdraft.
Overdraft – 19.3%
Personal loan – 14.6%
Secured loan – 9%
Payday loan – 7.6%
Re-mortgage – 3.3%
“In recent years, the cryptocurrency industry has grown rapidly and cryptos are becoming a more mainstream product every single day. Even tech giant PayPal has now introduced a cryptocurrency trading platform, making it accessible to everyone.
Although cryptos, and specifically Bitcoin, have seen people make thousands or even millions in profit; the last few months have shown that they are incredibly volatile and can see investors losing large percentages, or all, of what they put in very quickly.
It’s concerning to see that so many people have turned to borrowed funds to purchase cryptocurrencies as they are extremely unpredictable and offer no guarantees that the money invested will be returned. So, if people are investing money that isn’t theirs and subsequently losing it, this could cause some serious financial challenges later down the line.
The biggest concern is those who don’t have the means to pay the money back, especially if their original plan was to repay their loans with the profits made from their investment. With a very strong possibility of losing the money for good, people may be left severely out of pocket and racking up interest on their credit cards and overdrafts. Also, some credit card providers will view this type of transaction as a cash advance, meaning a cash advance fee and higher interest rate will be applied.
So, if you are thinking of making an investment into cryptocurrencies, you should only invest an amount of money that you can afford to lose and it should be funded through income and/or savings rather than a credit facility.
Borrowing money to invest in cryptos can become a very vicious cycle that’s difficult to break. Once you start losing money, it can be very tempting to invest more to make the money back; especially if you don’t have other means of repaying the funds.
Great care should be taken when you invest money anywhere, but especially when it’s something as volatile as cryptocurrencies. If you can, seek some professional financial advice first and never invest more than you can afford. Buying cryptocurrencies should also not be your only form of investment or savings as there is very little stability – spread your investments out and treat cryptocurrencies as a smaller, fun investment.”
Notes to journalists/editors:
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