The same poll indicates that 81% of British consumers still don’t understand how cryptocurrencies work.
Cryptocurrencies appear to be more popular than stocks and shares in the U.K., according to a new survey.
AJ Bell’s research suggests that 5% of Britons invested in a stocks and shares ISA (a tax-free savings account) in 2019/20. By contrast, 7% snapped up digital assets.
Those buying the likes of Bitcoin are predominantly male and under the age of 35. Of those who bought cryptocurrencies, 71% said they had made a profit.
However, as ever, challenges remain. The same poll indicates that 81% of British consumers still don’t understand how cryptocurrencies work.
Laith Khalaf, AJ Bell’s financial analyst, said:
“When more people are buying cryptocurrency than investing in a stock market ISA, you have to conclude the world’s gone crypto crazy. It’s possible that cryptocurrencies will ultimately prove to be profitable in the long run, though that’s still highly debatable.”
There’s Always a But…
While these figures are promising when it comes to crypto adoption, the self-same survey pointed out that 12% of crypto investors ended up making a loss — “and perhaps more concerningly, 17% said they don’t know if they’re in the black or the red with their crypto purchase.”
Overall, Khalaf fears that some consumers “are jumping into the deep end with cryptocurrencies before learning how to swim in shallower waters.”
In his view, “there’s no harm in buying crypto if you have lots of other bases covered with your finances.” By having a diversified portfolio and investing only a small fraction of savings in this digital asset, “losses won’t affect your overall wealth too badly.”
However, young people who go all in on cryptocurrencies “could find their finances seriously damaged if crypto markets take a turn for the worse.” Khalaf added:
“While younger consumers do have time to rebuild their wealth if their investments take a nosedive, that’s still an experience to be avoided if possible.”