Most Crypto Investors Take ‘Friend Suggestions’ For Investment – FINRA
Investments in cryptocurrency have increased quite rapidly in recent years and have established themselves as a potential investment vehicle across the financial markets. So much so that along with the experienced investors with the knowledge of the field, newbies or people with minimal or even no previous information are entering the growing asset class. Recent research by the US financial supervisory authority, the Financial Industry Regulatory Authority, indicates the same along with surprising reasons.
Expert advice is always crucial, especially when you put your hard-earned money as an investment on an asset. However, the survey found that a significant number of people entered the market either at the suggestion of friends or dropped out of fear of missing out (FOMO).
In its “New Investors 2022: Entering the Market in Novel and Traditional Ways” survey, FINRA found that a large percentage of new cryptocurrency investors entered the market in 2022 and did so after taking “friend suggestions.” The number of such people remained the highest among those asked, with approx. 31%. On the contrary, the number of people who signed up as new account investors following suggestions from friends was 8%.
According to the report, the new account investors are those who opened a taxable investment account in 2021 or early 2022. While the new cryptocurrency investors are those who first started buying cryptocurrency in 2021 or early 2022, regardless of having a taxable investment account.
The group that had a significant share as new investors, those who start their investment journey with small amounts, also had 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 were those who entered after the fear of missing out. The figure for both the new account and crypto investors is 10%.
Another important finding of the report was that crypto investors became aware of attacks on the emerging asset class. Those who were told by friends, family and colleagues at work about crypto investing were 48% of the survey participants. While the second most effective source for the information was social media platforms, consisting of 25% of the people.
The FINRA survey also found that the investors entering the crypto space are of a relatively younger age, but also with less educational qualifications. It suggests that the average age of such investor class is 37 years, while about 28.5% of these investors have completed their four-year degree. The same figures are 43 years and 46.3% for investors in the stock market.
The US regulator, which primarily oversees the securities industry by ensuring that stockbrokers operate fairly, conducted the survey in September 2022 and included 465 participants, all US residents.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional money exchange systems. She is also fascinated by the blockchain technology and its function.
