A rise in Bitcoin prices is the most important factor for a significant increase in the number of new investors, instead of distrust in public institutions, dislike for traditional banks, or search for a store of value, according to a report by the Bank for International Settlements (BIS).
See related article: Bitcoin hits lowest price in two years as Binance cancels FTX acquisition
Fast facts
- Users are typically active on crypto exchange apps after Bitcoin prices rise, revealed a “BIS working papers” report published on Nov. 14. Bitcoin is the largest cryptocurrency by market capitalization.
- About 40% of these new users are men under 35 years old, commonly identified as the most “risk-seeking” segment of the population who are more sensitive to changes in Bitcoin prices compared to women or older users.
- “The price of Bitcoin remains the most important factor when we control for global uncertainty or volatility, contradicting explanations based on Bitcoin as a safe haven,” the report said.
- BIS said its findings raise concerns that the general public or retail investors are not fully aware of the risks involved in the crypto sector.
- Bitcoin was trading at US$16,909 at 4.30 p.m. Hong Kong time on Tuesday, up almost 1 per cent in the last 24 hours, after it fell to a two-year low of US$15,682 last week following the FTX debacle.
See related article: Retail investors shouldn’t invest in crypto: Singapore’s deputy PM