In a move inspired by the current FUD in the market over an imminent Bitcoin crash, Lloyds has now banned its customers for using credit cards for crypto transactions. Over nine million people use Lloyds credit cards. The bank will advise them to avoid bidding on cryptocurrencies.
The price of bitcoin has shattered over the course of 1 month. After reaching a high of 14,000 pounds in December, bitcoin lost 57 percent of its value. It is now trading at less than 6,000 pounds.
In international markets, bitcoin prices went to touch $19,000 to $20,000. Since then, the price fell drastically, and now the coin is selling for less than $10,000. Bitcoin is expected to stay bearish for the month of February as news of imminent crackdown and strict regulations around the world is spreading fear among the investors.
Fears of a crackdown scares banks
Lloyds and other banks around the world are scared that a bitcoin crackdown will leave them with huge debt. As buyers continue to buy bitcoins with their credit cards and prices fall, banks will be left with a massive unpaid debt. This will wreck their balance sheets.
Note that a bitcoin crashes last week wiped off $100 billion from the markets in just one day. If the prices do not make a bullish reversal soon, the banks will have no choice but to bear the burden of several million pounds of the loan. If another such crash is imminent, banks will have to be wary of the situation.
The Telegraph reports that other banks will be following suit very soon. Lloyds warning will be issued to credit card customers in MBNA, Bank of Scotland and Halifax. A company spokeswoman said that the customers would be banned from buying bitcoin online. Sellers will be flagged and blacklisted as Lloyds does not “accept credit card transactions involving the purchase of cryptocurrencies,” mentioned the spokeswoman.
British PM wary of digital currencies
Speaking at the World Economic Forum, Davos, the British PM Theresa May suggested that there is a need to look closely at bitcoin developments and regulate these transactions. Since then, bitcoin prices are plummeting. Soon after her comments, the international price of Bitcoin has stayed below 50% from their all-time highs. Governments around the world are worried about the use of cryptocurrencies, especially because they are connected with criminal activities.
British investors are now flocking to gold to gain a hedge investment against inflation and the impending market crackdown. Some European gold traders are even suggesting five times increase in gold demand, solely because of the FUD over bitcoin doom. Many investors are now talking about the fears of losing their capital.
Many veterans on Wall Street are predicting a crash. Peter Boockvar, a veteran at Wall Street has already warned of a 90 percent price slice off bitcoin, calling it an “epic crash.” In a CNBC interview, he said that prices could fall to as low as $1000 to $3000 in the next one year. This will translate to 718 to 2,154 pounds.