Financial experts: Investing in crypto can be a serious risk

WTAP News @ 5 - Financial experts: Investing in crypto can be a serious risk
Published: Nov. 16, 2022 at 5:22 PM EST
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MARIETTA, Ohio (WTAP) - With recent news of cryptocurrency companies — such as FTX and BlockFi — going under, financial experts are saying for clients and those out there to think twice before looking at crypto.

Financial experts with Hall Financial Advisors say that investing in crypto can be a serious risk factor.

Certified financial planner, Kevin Knab says that some companies in crypto are going without any regulations and process and transparency about the currency associated with the company.

And although there are fluctuations with physical forms of currency — including the U.S. dollar — the market for crypto is still too uncertain to gauge and can at times be volatile as Knab says.

“To us, as advisors, we actually view that as a significant increase in risk. Because when we come down to investing, we believe it comes down to fundamentals,” says Knab. “Are there earnings? Is there a balance sheet that supports the price of some of these goods or these assets? And ultimately, at the end of the day, we don’t have that transparency yet with these cryptocurrencies to show whether or not they are overvalued, undervalued or just right. And when we see these huge swings on a daily basis, it does signal that there’s increased risk underlying those assets.”

Knab also says that a lot of as to why companies like FTX failed is because of accruing too much leverage and loans.

Hall Financial Advisors officials say to do research before investing in this sort of market, but it does put a “high-risk factor” into the client’s portfolio.