The recent crash in the broader crypto market, which saw Bitcoin (BTC) plummet to as low as $102,000 on Friday, has ignited renewed criticism, leading to a cautionary statement from Hargreaves Lansdown (HL), the largest retail investment platform in the UK, which manages approximately $225 billion in assets.
In a statement, HL acknowledged that while Bitcoin has delivered positive long-term returns, it has also undergone extreme volatility, making it a riskier investment compared to traditional assets like stocks and bonds.
Hargreaves Lansdown is the third major financial institution to issue such a warning recently, joining Deutsche Bank and Elliott Management in expressing skepticism about the value proposition of cryptocurrencies.
In January, activist investor Elliott Management cautioned its clients about an “inevitable collapse” of Bitcoin, citing its lack of substance as an asset.
While Hargreaves Lansdown’s assessment of Bitcoin’s volatility and risk is valid, it is important to note that Bitcoin has also proven to be a profitable investment.
Ethereum (ETH), the second-largest cryptocurrency by market capitalization, also climbed on Monday nearly 9% to hover around $4,130. After dipping below the $4 trillion threshold on Friday, the total market capitalization rebounded to reach approximately $3.9 trillion.
Within a span of 24 hours, Bitcoin lost more than $200 billion in market capitalization and dropped nearly 10% in value, while Ethereum suffered an even steeper decline of almost 14%.
The market turmoil even extended to stablecoins. USDe, one of the largest stablecoins by market capitalization, briefly depegged to 65 cents on Binance before swiftly recovering back to its $1 value.
Featured image from DALL-E, chart from TradingView.com
