The bitcoin price, well known to be highly volatile, had climbed over $10,000 last month before crashing back in the face of broader market turmoil caused by the spreading coronavirus—hitting lows of just under $4,000 per bitcoin before rebounding to around $5,000.
Ahead of bitcoin’s massive sell-off this week, the incoming Bank of England governor, Andrew Bailey, warned that bitcoin investors need to “be prepared to lose all [their] money”—adding his voice to a raft of bitcoin warnings from top government officials and regulators.
“There’s no guarantee of the value of bitcoin,” Bailey, who will begin his term as Bank of England governor tomorrow, told the U.K.’s Treasury select committee at the beginning of the month, where he was defending his record as head of the country’s Financial Conduct Authority watchdog, adding bitcoin “hasn’t caught on that much.”
“I’ve said publicly because we were concerned about it—if you want to buy bitcoin, be prepared to lose all your money,” Bailey said. “If you want to buy it, fine, but understand that what you’ve got has no intrinsic value. It might have extrinsic value, but no intrinsic value.”
Bailey, who served as the deputy governor of the Bank of England from 2013 to 2016, has previously slammed bitcoin and other cryptocurrencies, comparing bitcoin investors to gamblers in 2017 because “[bitcoin] is not a currency” and is “a very volatile commodity in terms of its pricing.”
Bitcoin’s sudden sell-off has caused chaos in within the bitcoin and cryptocurrency community, with one veteran trader warning the bitcoin price could crash below $1,000 per bitcoin—a level not seen since bitcoin’s epic 2017 rally sent the bitcoin price from under $1,000 to around $20,000 in under 12 months.
Bitcoin’s massive crash this week has been put down to global market turmoil sparked by oil cartel Opec’s failure to agree to a supply cut last weekend, sending the oil price to historic lows—but some think bitcoin’s move lower could have its origins elsewhere.
Opec, lead by Saudi Arabia, had wanted to cut oil production due to weaker demand caused by spreading coronavirus but some members, including Russia, torpedoed the plan.
Meanwhile, Bailey said the Bank of England would move quickly to soften the economic impact of the coronavirus outbreak under his leadership.