European Securities and Markets Authority (ESMA), an independent financial authority for the European Union, who has been analyzing the impact of covid on the financial market has made public the risks associated with crypto investment. According to the regulator, the increasing number of unregulated crypto asset increases the risks of investing in the sector. The body also noted that there has been a massive surge in the value and volume of cryptos traded in the market and top of the list is Bitcoin, whose value rose to an ATH of $61,683 recently.
ESMA also went on to mention that the causes of the rise in price of these assets can be tied to the increased number of positive news emanating from the industry. PayPal’s announcement of its support for crypto assets plus the increased interest in decentralized finance (DeFi) by crypto enthusiasts led to the increased value.
ESMA Says Crypto Industry Leveraged on Covid
ESMA highlighted the role the pandemic might have played in pushing investors into crypto. According to the regulator, investors were searching for opportunities with high yields which were offered in abundance on DeFi. Plus the increased liquidity brought about by the unprecedented stimulus packages that countries were dishing out to reduce the impact of Covid 19 on economies had more people queuing into the crypto sector.
The body went on to warn investors to be wary of the industry because of its volatile nature and the fact that some of the assets carry high investment risks which could be harmful to the unsuspecting investors.
Conclusively, ESMA said it would continue to monitor the crypto industry and it would continue to offer regulatory advices as time goes.
