The skyrocketing prices of cryptos earlier this year have enticed many Americans to enter the market. In fact, the majority of U.S. crypto investors are relatively new to the asset class and only started investing in digital currencies, having bought only in the past six months.
A majority of investors are newcomers to the crypto space. In fact, 61 percent of American investors have only started investing in crypto for the past six months, according to a study conducted by the NORC at the University of Chicago.
The study also revealed that 13 percent of respondents Americans purchased have purchased or traded in crypto for the past 12 months. This shows the growing interest in cryptocurrencies among U.S. investors.
However, more Americans have invested in stocks compared to crypto. The study revealed that 24 percent of the respondents traded in stocks over the same period, almost double that of crypto investors.
NORC’s research also revealed that there are demographic differences between stock and crypto traders. Crypto traders are younger than their stock trading counterparts and they are also more diverse when it comes to race/ethnicity.
“Cryptocurrencies are opening up investing opportunities for more diverse investors, which is a very good thing,” said Angela Fontes, a vice president in the Economics, Justice, and Society department at NORC at the University of Chicago. “It will be important that these investors have access to sound information as they make decisions related to these often more volatile investments.”
Crypto investors most get their information about cryptocurrency from exchanges (26 percent), general trading platforms like Fidelity or Robinhood (25 percent), or social media (24 percent). NORC said that 2 percent source their information from a broker or advisor.
The lack of understanding of digital assets is a major factor that is stopping some from investing with 62 percent of the respondents saying that they do not adequately understand the crypto market to make an investment decision. The other factors deterring people from investing in digital assets are the lack of money to buy into cryptocurrencies (33 percent), security concerns (35 percent), no idea how to make crypto investments (31 percent), and price volatility (30 percent).