20% of Crypto Investors Are in Debt to Buy Cryptocurrencies

Investing has always been a tricky subject. As a general rule of thumb, you want to invest what you are willing to lose. However, in the world of cryptocurrencies, things are a bit unpredictable.

If you are going to start your own business, it is highly suggested that you rather take the time to study the market and even borrow the money that you need. You can also find investors who are willing to share the risk with you. As for crypto investing, unfortunately, many are using their credit cards to purchase cryptocurrencies.

According to a study, people are in debt buying cryptocurrencies. Around 20% of people who bought crypto such as Bitcoin, Ethereum, and other altcoins went into debt in order to acquire their coins or bought it at a margin. That is after CoinDesk, a New York-based website for crypto prices, released information from their survey of more than 3,000 people.

Why Is This Alarming?

There are a number of reasons why this is becoming alarming. For one, regulators are after cryptocurrencies in different parts of the world. Liquidity of these digital assets is becoming harder and harder especially in parts of Asia including South Korea and China. In addition to this, you also have to deal with the volatility of cryptocurrencies. Since mid-December when Bitcoin almost reached $20,000, cryptocurrencies have been on a bearish trend including other altcoins. And for those individuals who invested midway or on a high, they have definitely lost a significant amount of money.

Citigroup Inc. has already announced that it is already halting purchases of Bitcoin and other cryptocurrencies on their credit cards. The same is true for JP Morgan and Bank of America. The banks are worried that it becomes impossible to pay the debt.

CoinDesk mentioned that 52% of the respondents have mentioned that they have repaid their debt.

Credit Card Tightening a Reason for Bearish Trend?

There are experts who agree that credit tightening is among the primary reasons why Bitcoin and other altcoins have been on a downward pressure on its price lately. In fact, from almost $20,000 before the end of 2017, Bitcoin is simply afloat at around $8,121.33.

Another reason for this is that Asian countries are now becoming strict when it comes to crypto-related activities. China has been clamping on many crypto activities in the country from trading to mining. More recently, China has ordered a ban on foreign cryptocurrency exchanges. In September last year, China has tightened its rules ordering a ban on local cryptocurrency exchanges.

South Korea is another country that has affected the price of cryptocurrencies in the last month alone. There were threats that South Korea was going to ban crypto activities.

Now that there is a ban on credit card use when purchasing Bitcoin and other cryptocurrencies, investors have no other choice but to invest what they have. And this could stop people with risky personalities to get involved in this volatile market. In the long run, this can be a good move considering how much money you can potentially lose from cryptocurrency price fluctuation