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Today's winner:Bitcoin price: Crypto investments more popular than stocks and shares Isas, says AJ Bell
The cryptocurrency boom doesn't look set end anytime soon with new research suggesting Britons are more interested in bitcoin and alt-coins than in stocks and shares Isas.
Cryptocurrencies, led by bitcoin, have enjoyed a bull run this year as the likes of Mastercard, Tesla and JP Morgan all voiced support.
A survey conducted on behalf of DIY investment platform AJ Bell suggests 7 per cent of Britons bought into cryptocurrencies over the last year.
That compares to 5 per cent who have invested in a stocks and shares Isa, HMRC data published last week shows.
Stocks and shares Isas are a popular choice for those who want to put money into a range of different investments, which include individual shares, investment trusts and gilts, with a tax-free limit of £20,000 each financial year.
'When more people are buying cryptocurrency than investing in a stock market Isa, you have to conclude the world's gone crypto crazy,' Laith Khalaf, financial analyst at AJ Bell said.
Analysts have been broadly sceptical of the recent popularity of crypto, particularly given much of the volatility has been tied to Tesla boss Elon Musk's tweets.
Bitcoin is back above $40,000 after Musk tweeted the electric car company would resume accepting bitcoin once it becomes environmentally friendly on Sunday.
In February, Tesla said it had invested $1.5billion in bitcoin and would start to accept it as a form of payment for its cars.
However, last month Musk reversed this position citing environmental concerns.
Other cryptocurrencies also rose on Musk's comments, with the second-largest crypto ethereum rising to trade above $2,600.
'It's possible that cryptocurrencies will ultimately prove to be profitable in the long run, though that's still highly debatable,' Khalaf said.
A large proportion of consumers will be sitting on decent profits if they bought into crypto at the right time, but Khalaf warns the inherent volatility means profits can be wiped out quickly.
By contrast the stock market has staged a recovery since the initial shock of the pandemic which saw the FTSE 100 suffer its largest one day crash since 1987.
It is currently trading up 9.2 per cent year-to-date.
AJ Bell's research shows 12 per cent of crypto investors reported making a loss in the past year.
Meanwhile, 17 per cent said they do not even know if they're in the black or the red with their crypto investments, and the vast majority admit to not understanding how cryptocurrencies work at all.
The findings were based on 1,269 respondents by findoutnow.
'It certainly looks like some consumers are jumping into the deep end with cryptocurrencies, before learning how to swim in shallower waters,' Khalaf said.
More and more trading apps are offering younger and less experienced customers the opportunity to invest in riskier assets like crypto.
'For many investors, having a side hustle investment gives them the opportunity to flirt with something racy, alongside their conventional Isa or SIPP,' Jessica Galletley from Boring Money said.
'This is OK as long as they do it with their eyes wide open and recognise the risks involved.'
The Financial Conduct Authority has already warned younger investors of the dangers of speculative and illiquid assets.
Cryptocurrencies are most popular among younger men, recent Boring Money research shows, with 40 per cent of male investors under 45 saying they would consider crypto or have already purchased some.
'There's no harm in buying crypto if you have lots of other bases covered with your finances, and any losses won't affect your overall wealth too badly,' Khalif said.
'Younger people do have more confidence in their understanding of cryptocurrencies, but the youthful profile of crypto buyers suggests they may have accumulated few assets so far and could find their finances seriously damaged if crypto markets take a turn for the worse.'
WHAT IS BITCOIN?
You'll often hear it described as a cryptocurrency, which isn't very enlightening. In simple terms, it is virtual money, with no physical notes or coins. It was invented by someone claiming to be called Satoshi Nakamoto and to be Japanese, but his or her real identity is unknown. In its early days it was often used for illicit activity but bitcoin has become attractive to ordinary investors.
Bitcoins are stored in a digital wallet on smartphones or computers. Transactions are recorded on Blockchain, the giant online ledger behind the currency. You can in theory use bitcoin to pay for goods and services, though they are not accepted everywhere. Or you can buy it in the hope of a profit.
Anyone with access to a computer or smartphone can buy bitcoin through an exchange. You will have to pay trading fees on top of the cost of the bitcoin itself.
Bitcoin is not backed by any tangible asset or underlying commodity such as gold, so it has no intrinsic value. It is 'worth' what people are prepared to pay – and that has been extremely volatile. Last March, one bitcoin was worth round $5,000. After a spectacular rally around Christmas, it surpassed $41,000 in the first week of January and climbed to beyond $60,000 by mid-April. Currently it is at $40,000.
It depends on whether you believe bitcoin will rise in value. It's a huge risk. City watchdog the FCA recently reminded savers that they should be prepared to lose all the money they put into bitcoin, so only invest cash you can afford to lose. If things do go wrong, dealings in bitcoin are largely outside the regulators' safety nets.