The decision to invest in cryptocurrencies is influenced by friends for many new cryptocurrency investors. In comparison, only 8% of first-time buyers of stocks or bonds said their friends had impacted them, suggesting that bitcoin buying may have more of a social component.
The fear of missing out on a lucrative investment opportunity, or FOMO, was credited with about 10% of new cryptocurrency investments, on the other hand.
The surveys you must know
465 US respondents who were surveyed between September 9 and September 29 of last year were included in the study. Random sampling was used to make the selections, and the error margin was set at 6.75%.
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It was discovered that younger cryptocurrency investors had an average age of 37 as opposed to 43 for stock investors. Additionally, they had less college education than stock investors, with only 28.5% of them completing a four-year degree.
In addition, the poll found that 48% of cryptocurrency investors cited friends, family, and coworkers as their primary source of information about the market for digital assets, compared to 35% of stock investors. 25% of cryptocurrency investors cited social media as their main information source, making it the second most popular medium behind books and magazines.
The results and transfer
According to the findings, 23% of investors in new accounts kept less than $500 in their accounts, which is the majority. A total of 19% of participants held amounts between $500 and $2,000, between $2,000 and $10,000, and at least $25,000.
It’s important to note that despite the fact that people had bought cryptocurrencies, their understanding of them was not as extensive as they had anticipated. The owners of digital assets only received a 26.6% on a test with five questions covering the issuance, transfer, taxes, and fraud susceptibility of cryptocurrencies.
The fear of missing out, or FOMO, is a strong motivator that can lead people to make choices they may come to regret. It is a form of panic buying. In the light of
Investment and FOMO
Investing based on FOMO or peer pressure can be detrimental in a number of ways. First off, it could lead people to ignore crucial elements like an asset’s intrinsic value in favour of concentrating only on its level of popularity. This may result in investments in overpriced assets that are likely to see a dramatic fall soon.
Second, investing motivated by FOMO may lead people to make snap judgements that are at odds with their long-term financial objectives. This can lead to a lack of diversity and an inability to balance risk and return, which might raise the possibility of long-term financial loss.
Peer influence and FOMO
Last but not least, investing motivated by FOMO and peer pressure can be emotionally taxing since people may feel under pressure to constantly watch their investments and make adjustments based on passing trends. This may result in stress, worry, and eventually burnout.
The rise in cryptocurrency is partially a wager on punishing interest rate increases, a scenario that has also helped stocks, bonds, and gold. Even then, given that central banks like the Federal Reserve are promising to maintain policy rates high until still-strong inflation is defeated, investors are speculating as to whether all these assets have moved too far, too quickly.
The FINRA study offers insightful information about the motivations and inclinations of novice bitcoin investors. It demonstrates how important FOMO and the impact of friends are.
The report also emphasises the value of education for novice investors, as many lack the knowledge needed to make wise investing choices. The survey highlights the need for prudence and knowledge when investing in cryptocurrencies overall.
“FOMO is likely to play a role in how the market develops from here,” despite the fact that there is still a lot of uncertainty surrounding digital assets, including if the short squeeze that is driving up prices will eventually let up.