31% of Crypto Novices Making Mistakes by Following Friends, Advisor Warns

31% of Crypto Novices Making Mistakes by Following Friends, Advisor Warns

Cetoex News – Crypto adoption has surged over the years. From skeptics to investors, the general public has started investing more and more in cryptocurrencies. While some truly understand the underlying technology and long-term potential, others are just jumping on the bandwagon.

A recent study published by the Financial Industry Regulatory Authority, the Investor Education Foundation, and NORC at the University of Chicago has revealed that almost 31% of investors in 2022 bought cryptocurrencies because of their friends’ suggestions.

Friends’ recommendations end up being the motivating factor to buy crypto

The details from the study reveal that the no. 1 motive for these cryptocurrency buyers was their friends. In comparison to traditional assets such as stocks and bonds, only 8% of new investors hold a similar share. The study also stated that there is a disparity and a social element to cryptocurrency investing that is not evident in bond and equity investments.

Gary Mottola, research director at the FINRA Investor Education Foundation and a co-author of the report, stated that while a friend’s recommendation is not necessarily a poor reason to buy crypto, it can be a double-edged sword.

Mottola stressed that friends and social media recommending crypto might not be the most reliable ones out there. The statement is relatively true, as one should enter the cryptocurrency realm to understand the true value and the underlying risks. FOMO shouldn’t be the primary reason for the investment in any way.