Dubai: The rush to invest in BitCoin is causing some investors to make risky bets, according to local analysts.

Some of the local brokers providing exposure to Bitcoin are ready to give a leverage of up to 100 times of a investors available capital. Small traders can borrow as much as 5 times.

“Taking so much leverage is like playing with fire. Looking at the intra-day volatility of more than $3,000 (Dh11,019), the account with at least five times leverage may get wiped off and result in massive losses,” said an analyst who wished not to be named.

But other asset classes like forex has similar leverage or it can go to as much as 200 times, but it is the volatilty that makes it risky, according to Saleh Almezel, a wealth manager based in Dubai.

Bitcoin prices moved in a large range of $13,000-$17,000 last week, making traders prone to large price swings, and therefore similar profits or losses.

But a local broker, who wished not to be named, said it is possible for traders to profit from the volatile cryptocurrency.

Excessive leverage

“The use of excessive leverage will create challenges in terms of managing profits, and losses therefore leverage should be kept at manageable levels, and definitely within a range that the client is comfortable with. There’s no need to over-leverage in order to make larger profits. There is enough opportunity for profits due to the high level of volatility without getting into excessive leverage,” said the broker.

In all the message is simple: buy bitcoins with the money that you have. “Bitcoin is good for people who buy with cash. It’s an over-marketed product by selling dreams of becoming a millionaire,” Almezel said.

Interest growing

ADS Securities, which offers contracts for difference on Bitcoins locally, said all kind of investors are now interested in the cryptocurrency.

“We see all kind of investors getting into Bitcoin. Early adapters were the ones who already have some exposure on technology-related themes,” Konstantinos Anthis, head of research, ADS Securities told Gulf News.

“But over the past few weeks, all kinds of investors are interested in taking exposure as bitcoin dominates the news headlines and more people are getting educated in this new kind of financial instrument,” Anthis said.