On November 14th, the Bank for International Settlements (BIS) published a research report that outlined the factors that lead retail investors to participate in the cryptocurrency market.
They provide support for the notion that the majority of investors perceive cryptocurrencies as speculative investments as opposed to methods of settlement for legitimate business dealings.
Their key findings indicate that more entrance by retail investors has been associated with price rises for Bitcoin globally. Notably, data from 2015 to 22 shows that users are more likely to use cryptocurrency trading applications actively in the months after a spike in the price of Bitcoin.
It was also highlighted that this positive association holds up well when other possible causes are taken into accounts, such as the general state of the financial markets, uncertainty, or national characteristics.
Moreover, for the protection of investors and consumers as well as for financial stability, this finding is also pertinent for policy discussions on the regulation of cryptocurrencies. Simple calculations show that it is highly likely that between 73 and 81% percent of individuals lost money in investments involving cryptocurrency.
However, the findings point out a major concern among retail investors that they may not be aware of the risks involved with investing in cryptocurrency. Events from recent times, such as an increase in interest rates and other financial burdens, can cause this newfound asset class to suffer a significant blowback.
Crypto App Adoption When Bitcoin Was On Spike
The report says:
We find that 73% of the users downloaded their app when the price of Bitcoin was above $20,000 – above the price of Bitcoin in October 2022.
The second finding in the research is that, when the demographics of crypto app users are examined, it is discovered that 40% of users are males under 35, a group that is typically considered to be the most “risk-seeking” in society.
Compared to female users and older males, these users are more sensitive to changes in the price of Bitcoin. Additionally, they discover a user sensitivity for Android users, who typically earn less than iOS users.
The highest rates of crypto exchange app adoption across the research period were seen in Turkey, Singapore, the United States, and the United Kingdom, as assessed by the total number of downloads per 100,000 individuals. China and India have the lowest rates of retail use, where legislative constraints probably limit broader implementation.
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