Retail investors have invested hundreds of billions of dollars into cryptocurrencies over the past year
The Brazilian Central Bank (BC) has revealed that Brazilians have invested more than $4 billion in cryptocurrencies since the start of the year. The latest development brings Brazil’s total cryptocurrency investment to $50 billion, higher than the $16 billion citizens have invested in the stock market.
Brazilian media outlet Portal do Bitcoin reported that the central bank said the highest purchase came in May when Brazilians bought cryptocurrencies worth $756 million. However, with the bear market taking over in the past few months, the investments declined.
Citizens invested $695 million in June, and $583 million in July as Bitcoin and the other cryptocurrencies experienced a dip in prices. BC’s president, Roberto Campos Neto, pointed out that cryptocurrency investment is a very big business in Brazil and has started to attract the attention of regulators.
BC’s monetary policy director, Bruno Serra, added that the central bank has a very controlled forex market that allows it to be aware of cryptocurrency-related transactions. As a result, the bank has foreign exchange contracts for all transactions in Brazil.
As of August, the Brazilian government started to consider cryptocurrencies as ‘Goods’ or non-financial and produced assets per the International Monetary Fund’s recommended methodology. Serra pointed out that cryptocurrency investment has become a means of diversification of wealth by investors.
The director believes that cryptocurrency investment is here to stay, and regulating the sector is something financial regulators globally have to work on. The cryptocurrency market has grown to become a $2.5 trillion industry following huge growth recorded in recent months.
The surge in cryptocurrency investment is not unique to Brazil as more developing and under-developed countries are in this category. Countries suffering from hyperinflation like Nigeria have also recorded a massive increase in cryptocurrency investment over the past few months.
Bitcoin is currently trading above $62,000, and that could attract more people to the market in the short term. If that happens, Bitcoin could look to surpass its all-time high of $64,000 over the next few days.