Coinbase CEO issues warning to investors about Bitcoin risk

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Brian Armstrong is concerned that newcomers to cryptocurrency are losing their shirts.

Like the price of Bitcoin surpassed its previous record just under $ 20,000 – to new heights of all time Surpassing $ 23,000 per Bitcoin on Thursday, the CEO of Coinbase, America’s largest cryptocurrency exchange, issued a warning.

“We cannot stress enough the importance of understanding that investing in crypto is not without risk,” Armstrong written in a blog post on the company’s website. He pointed to the incredible volatility of the resurgent asset, a characteristic that may shock traditional investors more accustomed to walking up and to the right of their generally stable retirement fund holdings for years. “The market can move in both directions much faster than the stock markets,” he said.

The sentiment in Armstrong’s article is what most financial advisers would recommend when it comes to risky investments: don’t put in anything you don’t want to lose.

“We also caution investors who may focus on short-term speculation and encourage clients to seek resources and consult with financial advisors to better understand the risks associated with investing in cryptocurrencies,” said Armstrong said.

Coinbase derives the majority of its money from the fees it earns when people buy and sell Bitcoin on its trading platforms. The company, of which we say watch an IPO in the near future, has expanded its product offering to cater for more professional types of Wall Street in recent years.

Armstrong, one of The most introspective Bitcoin bulls in the cryptocurrency industry, urged to exercise caution before. During Bitcoin’s last rise in 2017, he said Fortune for a cover story on the tremendous rise in cryptocurrency, that “we’re probably in a bubble.”

While Armstrong’s last comment avoids that dreaded “b” word, the implication that the current mania might erupt remains. By the time Armstrong made his comments in 2017, the market value of all cryptocurrencies, as measured by CoinMarketCap, a blockchain analytics tracker, was over half a trillion dollars. Today, after a year marked by the economic devastation of the coronavirus pandemic, the total market value of the nascent industry has exploded above $ 670 billion at the time of publication.

Industry watchers have noted that the current latest bull run is different from the last time, as more investors and high-profile companies support so-called digital gold as a legitimate investment. Fintech-pioneer Square, tech firm Microstrategy, and life insurer Mass Mutual are among the companies that have bought Bitcoin – and that is to say nothing of the many hedge funds and asset managers that Bitcoin has conquered as converts. .

Armstrong communicates frequently through blog posts. He received a flashback for a recent article stating that Coinbase will stay “apolitical“and not weigh on social issues, against a trend in Corporate America. Sixty employees disagreeing with the policy took buyouts and left.

Ultimately Armstrong tells people not to do anything too reckless during this time of exuberance. “For those who believe in the potential of crypto, we all have to believe that we are still in the very early stages and that there is much more to come,” he said.

More to read absolutely financial cover of Fortune:

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