Bitcoin Buyers Turn to Credit Cards as FOMO Breeds Risk-Taking

(Bloomberg) -- Fear of missing out on the bitcoin craze has some underfunded investors placing bets with plastic.

About 18 percent of bitcoin investors used a credit card to fund purchases of the cryptocurrency, according to a LendEDU survey of 672 active investors conducted in December. Of those, 22 percent could not pay off their balance after buying the digital coin.

Even beyond those surveyed, interest in buying bitcoin with a credit card has surged, according to Google Trends. But going into debt for exposure to such a volatile asset, prone to price swings of plus or minus as much as 30 percent a day, comes with risk.

Such a move "is not a wise decision no matter which way it is spun," LendEDU research analyst Mike Brown wrote in his findings. "There is no guarantee that bitcoin investment returns will be profitable in the long run, but one can guarantee that the credit card company will need to be paid back."

Nearly 90 percent of those surveyed who said they hadn’t paid off their credit card bill said that they plan on doing so using money generated from selling their bitcoin.

Guess they’re counting on another year like the 1,400 percent gain registered in 2017.

For a menu of cryptocurrencies on the Bloomberg: VCCY

To contact the reporter on this story: Kailey Leinz in New York at kleinz1@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka

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