Influence from friends and fear of missing out (FOMO) were some of the reasons investors first bought crypto in 2022, according to a survey by a US financial regulator.
Released in late April by the US Financial Industry Regulatory Authority (FINRA), the Investor Education Foundation found that a large portion (31%) of new cryptocurrency investors cited a "friend's suggestion" as the primary reason for their foray into crypto.
This is compared to just 8% for novice investors in stocks or bonds, potentially indicating that there is “a social element to cryptocurrency investing that is not evident in stock or bond investing.” bonds," according to FINRA.
However, the ability to "start small" was the second most common reason for entering the crypto market at 24%, similar to stock and bond investors.
Meanwhile, around 10% of respondents indicated that fear of missing out (FOMO) on a “potentially lucrative investment opportunity” drove them to buy crypto for the first time, according to the survey.
The survey also found that 48% of crypto investors said they got information about the digital asset market from friends, family or work colleagues – compared to 35% for equity investors – followed by media social at 25%.
The survey also revealed that new crypto investors were on average younger (37 years old) and less educated (28.5% had obtained a four-year degree) than equity investors (43 years old and 46.3% with university degrees).
Related: Crypto becomes second most widely owned asset class by young women: eToro survey
Interestingly, the study found that owners of digital assets don't know as much about cryptocurrencies as they initially thought.
Digital asset investors scored 26.6% on a five-point quiz that asked questions about how a cryptocurrency is issued; transferred in US dollars; how is it taxed; and how transactions may be "likely" to be fraudulent.
The 465 participants interviewed on September 9 and 29 were randomly selected from American households. The margin of error was 6.75%. The 2022 survey was part of a 2020 follow-up survey.
Magazine: Magazine: Crypto winter may hurt hodlers' mental health