New to the game investors are looking towards bitcoin and other cryptocurrencies as their first choice of investment opportunity.
Bitcoin has been seeing a surge in some unusual adoption as of late. Emerging countries are starting to put their money into digital assets. Furthering the foundations of these digital currencies as a more viable global financial solution. Long touted as a borderless, trust-less currency that anyone can easily have, hold, and trade- that credo is now being out to the test more than ever. As more and more people find their way to bitcoin, it seems important to discover just what motivates an individual to invest into the market. Is it money? Tech lust? Or is it the everyday person, just looking for a better outlet to help their money work for them?
Bitvavo, an exchange platform designed to help retail investors navigate the twists, turns, and delightful volatility that makes bitcoin such an enticing investment shares some sentiment with a study recently released by Huobi Group. Which is newbies to investment love bitcoin. Retail investors are those that invest small, personal sums in markets, where institutional investors are those largely working with trusts, funds, and exceptionally large sums of money. Where bitcoin stands to excel, above traditional markets, is that researchers are finding some steadfast interest in both institutional and retail interest. Particularly in emerging countries. Creating a truly global and limitless market.
What Retail Investors Look Like
The recent study revealed that bitcoin has some major pull with the retail investor crowd. Specifically, those who are coming into the market from emerging countries. With most respondents hailing from Europe, Asia, Africa, and South America. The study was aimed at finding out what exactly it was that made retail investors tick. Which markets they are most interested in and what preferences and habits they display.
The study found out some fairly surprising things – perhaps most notably, that retail investors from emerging countries chose bitcoin, had little to no prior experience investment. With 78% of respondents saying they had little over a year’s experience. Ages also ranged anywhere from 26-50, suggesting a widespread adoption to even the early GenXers. Which was long thought to be unusual as earlier generations in general have a different relationship with technology. 34% of these retail investors manage their own portfolios and do their own shopping as well- with an interest in the new investment vehicle options that are starting to emerge.
The other surprising thing the study found, is that the majority of these investors report a fairly low income, and of that, they devote a large part of it purely to investment in digital assets. Up to 30% in some cases. Further proving that many crypto investors aren’t really parallel to classic Wall Street stereotypes, but instead are “average” citizens. Which is relevant as crypto performance continuing to surpass that of many legacy markets. Largely because of its straightforward process and non-discriminatory nature. Cryptocurrency is often a better investment, particularly for the legacy market naive, because transaction & institutional fees are much lower or non-existent. Focusing more purchase power on an original investment.
Not in It for the Long Haul, Yet
Another surprising factoid the poll left us with was that a surprising majority of 55% of respondents said they only plan on investing in digital assets for a year or less. Particularly those that invest in altcoins. As both bitcoin and Ethereum members reported a higher likelihood to hold their investment in the market for four years or more.
While the HODL strategy is often a favorite of most bitcoin and Ethereum investors both retail and institutional, it’s not unusual for them to look for gains in day trading altcoins, generally filtering back a percentage of those gains into one of the crypto giants. Especially as new investment vehicles emerge. Which could mean that crypto investments made by these market novices could later translate into longer holding strategies. Especially if bitcoin sees it’s predicted bull run in 2021. However, only time will tell what sort of strategies work best for the retail investor outside of one of the world’s economic powerhouses. But what we know so far is that bitcoin works, not just for big investors, and experienced investors- but for everyone.
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