Crypto investors claim to have better financial knowledge than they actually have, Portuguese survey shows

Maria Nikolova

Investors in ICOs and Bitcoins are more risk-taking than the average, a survey conducted by CMVM shows.

The profile of investors in crypto-assets appears to be different than that of other investors, according to preliminary findings from a survey conducted by the Portuguese Securities Market Commission (CMVM) between June 18 and August 6, 2018.

Thus, investors in crypto-assets (ICOs / Bitcoins) believe they have a better financial knowledge than they actually have. Typically, investors in ICOs / Bitcoins are younger, hold more shares and are more risk-taking. In particular, 47% of crypto investors are between 25 and 39 years old, and 62% admit to be risk-taking.

In terms of psychology, there is a somewhat worrying finding. More than half (63%) of investors in ICO / Bitcoins believe that they know enough about investments so that they do not need to consult a financial industry professional. This compares to 43% of the total sample of surveyed investors who believe so.

With regard to psychological biases, crypto investors often hold loss-making assets for too long in their portfolio. By contrast, the average investors are often prone to dispose of profit-making assets too swiftly.

Across the entire sample of surveyed investors, 36% say they are risk averse, 28% are neutral and 38% say they are risk taking.

When choosing a type of investment, 98% of the respondents consider whether they truly understand the characteristics of the product. The risk of loss of invested capital was a key factor for 95% of the respondents, and the clear knowledge of commissions and fees associated with the investment was mentioned as a factor by 89% of the respondents.

Let’s recall that, on November 3, 2017, CMVM issued a press release warning investors about the underlying risks of investment in ICOs. It drew attention to new financing models for business projects of a digital nature, most of which are not covered by the regulatory framework. This legal gap implies the non-existence of protection for investors, who face other risks, such as that of the loss of capital invested, high price volatility, the possible lack of liquidity, the lack of appropriate documentation for a complete understanding of the investment to be made, and, furthermore, the potential for fraud and/or money laundering involved in these offers. Concern over the risks of ICOs is equally prevalent among other European supervisors.

Read this next

Digital Assets

Silvergate dismisses speculation of trouble, says BlockFi exposure is minimal

Crypto-friendly bank Silvergate Capital claimed on a Tuesday blog post that it had minimal exposure to crypto lender BlockFi, which filed for chapter 11 bankruptcy protection this week.

Retail FX

Fidelity launches crypto trading for retail investors

Fidelity Investments, one of the largest brokerages in the world, has officially rolled out a commission-free crypto trading product for retail investors, starting with zero-fee trading for Bitcoin and Ethereum.

Digital Assets

ECB head calls for tougher crypto regulation after FTX collapse

President of the European Central Bank, Christine Lagarde, has called on lawmakers to start working on fresh crypto regulations to protect the financial system after the collapse of the FTX exchange.

Retail FX

CySEC updates rules for regulated brokers’ cross border activity

As CySEC’s attitude of adopting more stringent licensing guidelines and operating regulations becomes ever clearer, certain aspects of the rules and operations start to come into sharper focus.

Market News

Outlook for Gold: Can the Precious Metal Regain Power?

Gold set an all-time high at $2070 on March 08, 2022, when the price skyrocketed amid investors’ worries about the military conflict in Eastern Europe.

Crypto Insider

2022 Islamic Finance recap: as the space continues to evolve, blockchain stands to play a big part

Despite the global economy being ravaged by turmoil induced by the Covid-19 pandemic over the last couple of years, the Islamic finance industry has emerged relatively unscathed

Crypto Insider

Decentralized Exchanges and Pooled Trading Platform Applications

Decentralized exchanges are one-way blockchain companies take back the power of value creation.

Crypto Insider

How to maximize the safety of your digital tokens?

Digitalization is the future of the investment world. These are the most preferred and growing investments in the world.

Institutional FX, Interviews

FIA EXPO 2022: Interview with Trading Technologies

The derivatives trading industry has gathered in Chicago to attend the FIA EXPO 2022 on 14-15 November. 

<