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Irish central bank chief warns against investing in Bitcoin

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Irish central bank chief warns against investing in Bitcoin

Gabriel Makhlouf says Bitcoin is a threat to investor protection but not to financial stability.

While Bitcoin (BTC) is also being catapulted sharply higher today by the social media hype surrounding the financial markets, the head of the Central Bank of Ireland is warning of impending losses when investing in the cryptocurrency.

Gabriel Makhlouf, who is also a council member of the European Central Bank (ECB), issued his warning in an interview with Bloomberg TV today (Friday). The central bank chief was referring to a recent warning by the UK’s financial regulator, the FCA, which was published on 11 January. According to Makhlouf:

„As the FCA had warned a few weeks ago […] if investors invest in Bitcoin, they should expect to lose all their money. That’s my assessment as well.“

With regard to cryptocurrencies, Bitcoin Evolution investor protection would now be a top priority for regulators. However, Makhlouf does not see Bitcoin as a threat to the stability of the global financial system:

„While I personally don’t understand why people invest in such financial products, they seem to see them as financial products and investment opportunities. Our job is to protect them in the process. I see that as our main task. At the moment, Bitcoin is not a threat to the stability of the financial system. I’m more concerned about investors making sensible decisions.“

Some heads in the crypto industry, however, disagree with Makhlouf on this reading

For example, Mike Novogratz, the CEO of crypto investment bank Galaxy Digital, says that trading bitcoin is nowhere near as risky as the central bank chief suggests. Provided investors do not make excessive investments, the market-leading cryptocurrency would be completely harmless.

I am sick of this type of commentary. It’s just not true. Yes it’s a 100% vol asset and if you buy with leverage it’s very risky. But unlevered you will NOT lose all your money. $BTC is a macro asset. Repeat 100 times. It will be around for a long, long time. https://t.co/U5btK5HK5V
– Mike Novogratz (@novogratz) January 29, 2021

The Irish central bank chief is thus following in the same footsteps as ECB chief Christine Lagarde, who only on 13 January had called for Bitcoin to be regulated more strictly.

At the time of going to press, the crypto market leader’s share price stands at 37,338 US dollars, which corresponds to an increase of almost 18 % in the last 24 hours.