Why Retail Investors Continue Investing in Cryptocurrencies

Understanding Retail Investors' Interest in Crypto

A recent study by the Bank for International Settlements (BIS) explores why retail investors remain interested in cryptocurrencies despite price volatility and declines. The analysis covered crypto exchange apps usage in 95 countries from 2015 to 2022.

The Role of Bitcoin Price Trends

The study indicates that the primary driver for increased interest in Bitcoin is its rising prices. A notable pattern is observed where a surge in Bitcoin value is followed by an influx of new users to crypto exchange platforms. Approximately 40% of these new users are young men under the age of 35, a demographic often associated with higher risk tolerance.

Profitability and Investor Challenges

Despite the attraction to cryptocurrencies, a significant portion of retail investors, between 73% to 81%, have experienced financial losses. Many investors engage in trading, rather than using cryptocurrencies for transactions, highlighting the speculative nature of investments in this sector.

Geographic Trends in Crypto Adoption

The study also highlights geographical patterns in crypto adoption, with significant activity noted in countries like Turkey, Singapore, the United States, and the United Kingdom. This suggests varying levels of interest and adoption rates across different regions.

Conclusion

The BIS study underscores the link between Bitcoin price changes and the influx of new users, emphasizing the speculative appeal of cryptocurrencies. Despite the financial risks, the allure of potential profits continues to draw a young, predominantly male demographic towards crypto investments.