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German Financial Authority Warns Investors from Bitcoin

German Financial Authority Warns Investors from Bitcoin

Monday, 25 December, 2017 - 06:15
A Bitcoin (virtual currency) coin is seen in an illustration picture taken at La Maison du Bitcoin in Paris. (Reuters)

Germany’s Federal Financial Supervisory Authority (BaFin) has warned against investing in the encrypted currency Bitcoin, amid the huge fluctuation the virtual currency is witnessing.

BaFin President Felix Hufeld told the Bild local newspaper on Saturday: "These investments are about high speculation operations that involve a risk of total loss.”

He added that excesses leading to heavy losses are expected, calling on investors to be very careful.

Hufeld said investors should know that they might lose all their money in the worst cases. He also noted that his authority will track the developments closely, pointing out that BaFin should now reach a clear understanding on how to deal with this field.

Two major US financial markets are currently trading futures contracts in Bitcoin ahead of circulating the virtual currency in the traditional financial market.

Since the beginning of this year, the value of the online-traded Bitcoin has surged from about $1,000 to nearly $20,000, however, it has dropped to $12,000 before the holidays. The higher the Bitcoin prices surge, the more political circles and central banks call governments to set rules managing the circulation of this currency.

German Central Bank President Jens Weidmann had recently warned from the risks of this currency.

He said last week that "the Bitcoin trading is a speculation-based investment that could result in total loss of money."

Weidmann deemed this "digital currency" as misleading, adding: "The payment mean must show stability to its value. These features are not available in Bitcoin.”

The currency fell below $12,000 in trading on Friday after losing more than a third of its value in just five days, to record the worst week since 2013 following a strong rise that attained about $20,000 the week before.

The largest and most popular digital currency has hit a 20-time increase since the beginning of the year, jumping from less than $1,000 to $16,666 on Luxembourg's Bitstamp earlier this month and more than $20,000 on other exchanges.

But Bitcoin has fallen daily since then, the pace of the loss accelerated on Friday at 14:30 GMT, and the currency had recorded $11,848, a drop of 24.06 percent.

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