Research by the Financial Conduct Authority also revealed that almost 20% of buyers said they were driven by a fear of missing out, while one in seven were going into the red to finance their cryptocurrency purchases.
The median holding has risen from £260 a year ago to £300, though the highest holding reported by a respondent was £7m. Meanwhile, the typical profile of investors was “largely male, over 35 and [in the] AB social grade”, said the FCA.
Amid evidence that a new breed of DIY investors are putting their money into bitcoin, ethereum and Ripple, the FCA conducted detailed research in January which concluded that cryptocurrencies “appear to have become more normalised”, with fewer of those investing regarding them as a gamble, and more as a legitimate high profit alternative asset.
Looking at the main reasons people gave for putting money into bitcoin and other products, 38% responded: “I don’t want to miss out the next big boom.”
While most people said they paid for their cryptocurrency using their own disposable income or cash, 14% said they had turned to some form of borrowing – either a credit card, bank overdraft or loan from friends, family or a financial firm.
The 2.3 million people who are estimated to own cryptocurrency equates to about 4.4% of UK adults, and is up more than a fifth on a year ago, when the figure was 1.9 million.
The research comes in the wake of a surge of interest in bitcoin and other digital currencies, fuelled by prices hitting record highs, tweets from high-profile figures such as the Tesla chief executive, Elon Musk, and posts from influencers on sites such as Instagram and TikTok.
Some institutional investors and traditional financial services firms have made moves into the sector, though there have been a series of warnings from senior figures that the extreme volatility of cryptocurrencies means investors could face a wipeout. Despite the warnings, the success stories of huge profits and new millionaires who have managed to get rich quick through investing in Bitcoin makes more and more investors check out the opportunity and move parts of their investment portfolio to bitcoin trading
Two-thirds of cryptocurrency owners hold bitcoin, while the next most popular were ethereum (35%), Litecoin (21%) and Ripple (18%), according to the FCA research.
