More than a fifth (21 per cent) of cryptocurrency investors said their knowledge of the assets and investment opportunities in the sector is still poor or non-existent, research has found.
A survey from behavioural finance experts Oxford Risk revealed that over a third (36 per cent) UK retail cryptocurrency investors had a poor or non-existent understanding of the sector when they first bought.
The majority (81 per cent) said they bought small amounts just to find out what happens, 76 per cent have invested five per cent or less of their total savings in the sector and 41 per cent have less than one per cent of their savings in cryptocurrencies.
However, one in 10 crypto investors said they have more than 10 per cent of their total savings in the sector with seven per cent staking more than 20 per cent of their assets on cryptos.
Six per cent of investors said they have bought cryptocurrencies in the past 12 months, 12 per cent within the past five years and one in eight in the past five years.
Investors have been influenced by emotional factors, with around 35 per cent reporting they have read a lot about huge price rises while 15 per cent said family or friends encouraged them to buy.
However, some investors had a better understanding about crypto when starting out in the sector with 21 per cent of them saying their knowledge of the sector was good or excellent when they first invested. That rises to 33 per cent after first owning cryptos showing people build up knowledge.
“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,” said Greg B Davies, PhD, head of behavioural finance at Oxford Risk.
“That is worrying if people have substantial amounts invested in cryptos and do not understand what they have bought.”