Cryptocurrency investments have risen quite rapidly in the past years and set itself up as a potential investment vehicle across the financial markets. So much so that along with the experienced investors with the knowledge in the field, newbie investors or people with the least or even no prior information get their hands on to the burgeoning asset class. Recent survey from US financial regulator, Financial Industry Regulatory Authority indicates the same along with the surprising reasons.
The expert’s advice is always crucial, especially while putting the hard-earned money as an investment on an asset. The survey, however, found that a significant number of people entered the market either after suggestions from friends or fell for fear of missing out (FOMO).
In its “New Investors 2022: Entering the Market in Novel and Traditional Ways” survey, FINRA found that a huge percentage of new cryptocurrency investors entered the market in 2022, and did so after taking “friend suggestion.” Number of such people remained highest among the surveyees being approx 31%. On the contrary, the number of people entered as new account investors following the suggestion from friends was 8%.
According to the report, the new account investors who opened an investment account under the taxable regime in 2021 or early 2022. While the new cryptocurrency investors are those who first started purchasing cryptocurrency in 2021 or early 2022, regardless of having a taxable investment account.
The group which held a significant percentage as new investors, the ones who start their investment journey with small amounts, had also their place in the recent survey. For both the new crypto and new account investors, the percentage was 24%, as the report suggests.
Another parameter where both types of investors were in the same numbers was those who stepped-in after the fear of missing out. The number for both the new account and crypto investors is 10%.
One more crucial finding in the report was of crypto investors getting aware of forays into the emerging asset class. Those who were told by friends, family and colleagues at the workplace about crypto investment were 48% of the participants in the survey. While the second most effective source for the information was social media platforms, consisting of 25% of the people.
FINRA survey also found the investors entering the crypto space are of comparatively lesser age, but also with lesser educational qualification. It suggests the average age of such an investor class is 37 years while about 28.5% of these investors have completed their four-year degree. The same numbers are 43 years and 46.3% for investors in the stock market.
The US regulator, which primarily looks over the securities industry by ensuring the stockbrokers operate fairly, conducted the survey in September 2022 and included 465 participants, all residents of the United States.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/05/01/most-crypto-investors-take-friend-suggestion-for-investment-finra/