The Swiss banking giant UBS sounded a note of caution to its customers that regulatory crackdowns can pop the “bubble-like” crypto markets. Furthermore, they said bitcoin might become an unsuitable option for professional investors.
Beware of Popping The Bubble
In a recent note, the multinational investment bank – UBS Group AG – warned its clients about the current dangers in the crypto market. Executives of the Switzerland-based institution opined that the recent regulatory measures towards bitcoin and the alternative coins could “pop the bubble:”
“Regulators have demonstrated they can and will crackdown on crypto. So we suggest investors stay clear and build their portfolio around less risky assets. We’ve long warned that shifting investor sentiment or regulatory crackdowns could pop bubble-like crypto markets.”
The UBS managers referred mainly to the Chinese restrictions. However, they also reminded that the president of the Boston Federal Reserve said the stablecoin Tether (USDT) was one of the “financial stability challenges.” Additionally, numerous banks in the UK, such as TSB bank, demonstrated a harsh stance on cryptocurrency exchanges and dealing with digital assets.
The Swiss bank also outlined leveraged trading as a potential issue, despite the fact that it failed to outline there are higher leverage options in traditional markets:
“Crypto trading practices, such as extending 50X or 100X leverage, appear fundamentally at odds with mainstream finance regulation.”
UBS’s note further alerted that the market could be dangerous for professional investors, and they should beware:
“While we can’t rule out future price gains in cryptos, we see this as a speculative market that poses significant risks to professional investors.”
Crypto Services for The Wealthy Clients
It is worth noting that while the crypto market was booming at the beginning of May, the Swiss multinational bank intended to enable its wealthy customers to receive exposure to digital asset investments later in the year.
However, the Zurich-based institution with over $1 trillion in Assets Under Management warned about the infamous volatility of the crypto market and said it would allow its clients to allocate only a “very small portion” of their total wealth.
Interestingly, the news came as a surprise since in January this year, the financial service company working under the UBS Group AG hat – UBS Global Wealth Management warned that the entire digital asset sector could go to zero. It compared the crypto market to MySpace and alerted that investors could lose all of their money.