The buddy effect and fear of missing out (FOMO) are some of the reasons investors are buying cryptocurrencies for the first time in 2022, according to a study by the US Financial Services Authority.
A survey by the Investor Education Foundation of the US Financial Industry Regulatory Authority (FINRA) released in late April found that the vast majority (31%) of new cryptocurrency investors cite “friend recommendations” as the top reason for accessing cryptocurrencies.
This compares to just 8% for first-time investors in stocks or bonds, which FINRA says may indicate that "there is a social component to cryptocurrency investing that isn't apparent in stock or bond investing."
However, the ability to “start small” is the primary reason stock and bond investors are entering the cryptocurrency market at the same 24% rate.
Meanwhile, nearly 10% of respondents said fear of missing out on a “potentially profitable investment opportunity” (FOMO) was what prompted them to buy cryptocurrencies for the first time, according to the survey.
The survey also found that 48% of cryptocurrency investors said they had gathered information about the digital asset market from friends, family or colleagues, compared to 35% of stock investors, followed by 25% on social media.
The survey also found that new cryptocurrency investors are, on average, younger (37 years old) and less educated (28.5% with a four-year degree) than stock investors (43 years old and 46.3% with a bachelor's degree). .
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Interestingly, research shows that digital asset owners don't know as much about cryptocurrencies as they previously thought.
Digital asset investors scored 26.6% on a five-question quiz on how cryptocurrencies are spent; transferred in US dollars; What are the taxes? and how transactions can be "vulnerable" to fraud.
The 465 participants surveyed on September 9th and 29th were randomly selected from American households. The error rate is 6.75%. The 2022 survey is part of the follow-up survey in 2020.
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