It seems many people are buying blind and have been influenced to invest by rising prices and peer pressure.
A new study suggests that 21% of crypto investors rate their knowledge of digital assets as “poor or non-existent.”
Oxford Risk surveyed more than 1,000 Britons for its poll — and 36% of them said that they barely knew anything about how cryptocurrencies worked when they gained exposure to coins for the first time.
There were some bright spots in the research though. It seems that 81% of those who bought Bitcoin for the first time started small, and only bought a modest amount of cryptocurrency to begin with.
While 76% of investors have less than 5% of their total savings in crypto, 41% have less than 1% of their net worth tied up in digital assets.
A Lack of Understanding?
Just last month, new figures from the Financial Conduct Authority suggested that 2.3 million people in the U.K. now own cryptocurrencies — that’s 400,000 more than last year.
If Oxford Risk’s figures are accurate, a nationwide picture would suggest that about 460,000 people have “poor or non-existent knowledge” of the cryptocurrencies they have bought.
One worrying statistic from the FCA revealed that understanding about how cryptocurrencies work actually appears to have fallen over the past 12 months.
That said, 53% of those who were surveyed by the FCA said that they have had a positive experience since beginning to invest.
Figures from the Oxford Risk poll suggest that 35% of crypto investors had read coverage about Bitcoin prices surging, while 15% were encouraged to make a purchase by their friends and family. The company’s head of behavioral finance, Greg B Davies, was quoted as saying:
“The concern is that too many people are buying blind without knowing what they’re doing and are being influenced to invest by rising prices and other people encouraging them to have a go. That is worrying if people have substantial amounts invested in cryptos and do not understand what they have bought.”