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With the market rally sending the prices of popular cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) to new all-time highs, more investors are drawn into crypto. However, a new study revealed that some of the newcomers are not doing the necessary research before investing in these volatile digital assets.
A recent survey by Cardify revealed that only 16.9 percent of new investors “fully understand” the value and potential of cryptocurrencies, CNBC reported. The study was based on data collected between February 5 and February 12 involving 750 investors.
Surprisingly, the survey revealed that around a third or 33.5 percent of crypto buyers have either zero knowledge of the crypto market or those who call their level of understanding as “emerging.” This lack of understanding of the risks associated with the volatile asset class could place these investors at a disadvantage.
However, this lack of knowledge has not deterred newbies from entering the market. The study revealed that 40 percent of all crypto purchases were made by investors new to cryptocurrencies as trading in digital currencies became more accessible to the public via the crypto-trading features of PayPal and Square.
Fear of missing out on potential gains is one of the reasons for the entry of many new crypto investors into digital currencies. The survey revealed that 1 in 4 crypto investors entered the market hoping they could earn short-term financial gains.
Despite deciding to enter into the crypto market, the majority of the investors are not entirely confident about digital currencies. More than half of the survey’s participants revealed that their biggest concern is losing money due to the volatility of crypto prices.
Regulators worldwide are increasingly concerned about the trend and have tried to prevent people without sufficient knowledge of digital currencies from investing in them. For instance, Thailand’s Securities and Exchange Commission proposed additional requirements for new crypto investors such as a minimum age, a minimum annual income, and proven trading experience.
However, the regulator later backtracked after receiving a deluge of criticisms from the public. “I proposed the criteria that many considered too tough to prompt people to express their opinions on the matter and did not intend to say these are the exact qualifications that will be implemented,” said Ruenvadee Suwanmongkol, secretary-general of the SEC.
