Even as people across the globe diverse their investments with cryptocurrency, independent financial advisers in the UK are wary of the prospect. A poll now shows that more than nine in ten independent financial advisers (IFAs) in the UK would never recommend cryptocurrencies or meme stocks to their clients.
The opinion poll based on responses from 200 IFAs in the UK revealed that 93 per cent of IFAs would never recommend cryptocurrency investments to their clients. Similarly, 95 per cent would never do so for meme stocks, which are shares of companies that see a surge in viral activity fueled by social media platforms.
Investments in cryptocurrencies and meme stocks have surged recently during the pandemic with high savings and the growing popularity of the options among new investors. IFAs, however, are concerned about the highly volatile nature of this asset class, especially with the regulators keeping a close eye on their operations.
As a result, around 91 per cent of IFAs says that they would be concerned if a client invests in either type of asset.
Even though the professional interest in cryptocurrency investments is minimal, it is more than what it was before. A report by Reuters elaborating on the opinion poll mentions that a third of IFAs have increased interest in cryptocurrencies from clients this year. Similarly, a total of 14 per cent IFAs reported higher interest in meme stocks.
With the ongoing pandemic and economic losses plaguing the world, investors tend to see cryptocurrencies as a hedge against inflation. They turn to them for quick gains as many have now started believing that they are the payment method for the future.
Cryptocurrencies have shown a strong growth to earn this interest. Bitcoin, for instance, hit an all-time high in April this year before experiencing a massive slump due to certain bans on its use. It still registers a year-on-year growth of more than 40 per cent.
Other cryptocurrencies like Ether have rallied similarly. Meme stocks like Gamestop and AMC Entertainment Holdings have also generated much interest since the beginning of this year. The report mentions that traders have put as much money in meme stocks over the past two weeks as they did during the GameStop rally in January.
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