Almost half of the UK’s cryptocurrency investors (47%) do not currently have an ISA, according to new research by AJ Bell.

Findings from the investment platform also indicated that around four in ten (38%) crypto investors don’t have a pension.

AJ Bell’s study, conducted earlier this month among 1,283 cryptocurrency holders, suggested that most crypto investors are dabblers – with seven in 10 (69%) having less than 10% of their total assets in crypto.

However, this figure means that around three in 10 crypto buyers (31%) have more than 10% of their overall assets held in crypto, which would mean any crypto losses could potentially have a sizeable impact on the value of their overall savings pot.

AJ Bell head of investment analysis, Laith Khalaf, said that the research suggests a high proportion of crypto investors are “jumping in at the deep end of the risk spectrum”.

“ISAs and pensions are valuable tools that consumers can use to grow their wealth, but these are being ignored by a large swathe of the crypto community,” Khalaf commented.

“Many crypto buyers also seem to seriously underestimate the dangers of their investment, with a third saying they wouldn’t be willing to lose any of their capital. That’s not a comfortable position to be in, given the extremely volatile nature of cryptocurrencies, and the deep uncertainty about their future usage.

“The FCA has rightly warned investors that they should be willing to lose any money they put into cryptocurrency, but only three in 10 consumers surveyed said they would countenance that level of loss. It’s an extreme case, but then again, extremity is a key feature of crypto price movements.”

AJ Bell’s study also quizzed investors on their reasons for buying crypto assets, with “capitalising on digital trends” coming out as the most popular reason (39%). This was followed by good past performance (28%), low interest rates on cash (14%) and the ability to make digital payments (13%).

Just 7% of investors said one of the reasons they bought crypto was as a hedge against inflation.

“Crypto assets, and Bitcoin in particular, have been described as a digital version of gold, in that they can be held a store of value and a hedge against inflation,” Khalaf added. “Their extreme price volatility means they are ill-equipped to do either of those things, but interestingly while this rationale has been circulating in the crypto industry, it’s not really captured the imagination of consumers who are buying cryptocurrencies.

“The most popular reason given for buying crypto was to capitalise on digital trends, which makes more sense. Almost a third of crypto buyers have been attracted by exceptional past performance though, which is a worry seeing as the tremendous gains seen in crypto prices may well fizzle out, or worse, go into reverse.

“Bitcoin has lost around a third of its value since it peaked last year, and while it may rally again, it offers investors no intrinsic value to hang their hat on. Its price will therefore be heavily influenced by sentiment, which is a fickle and dangerous beast to ride.”

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