According to a recent survey conducted by the US Financial Industry Regulatory Authority (FINRA), the behavior of new investors in the cryptocurrency market varies significantly from those who venture into traditional equities or bond markets. The survey found that a significant number of new cryptocurrency investors were primarily motivated by recommendations from friends, with 31% citing this as the reason for investing in digital assets, compared to just 8% for equities or bonds.
Interestingly, the survey also highlighted the social element of cryptocurrency investing, which is not as apparent in traditional markets. In addition, the ability to start with small amounts was the second most popular reason for investing in crypto, at 24%, similar to equities and bond investors.
However, the survey also revealed a sense of FOMO among investors, with around 10% of respondents indicating that the potential for a lucrative investment opportunity drove them. The survey also showed that friends, family, or colleagues were the primary sources of information for crypto investors, with 48% of respondents relying on these sources.
The survey also found that 25% of respondents considered social media as an essential source of information. Moreover, the survey showed demographic differences between investors in cryptocurrency and traditional stocks. In particular, new crypto investors were found to be younger, with an average age of 37, and less likely to hold a college degree, with only 28.5% completing a four-year degree, compared to stock investors.
The survey revealed that digital asset owners had less knowledge about cryptocurrencies than they believed. When tested on a five-question quiz about the issuance, conversion to US dollars, taxation, and the possibility of fraudulent transactions in cryptocurrencies, digital asset investors scored an average of only 26.6%.
The survey was carried out from September 9 to September 29, and a total of 465 individuals from US households were randomly selected as participants. The margin of error for the survey was 6.75%. It was a follow-up to a similar study conducted in 2020. It is evident that investing in cryptocurrencies is a constantly changing and intricate field, and investors need to possess adequate knowledge to make informed investment choices.
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Disclaimer
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.