Only 5% of British cryptocurrency investors have recorded gains, and about 30% of the population does not ‘understand’ cryptocurrency, according to a new study by London-based SME investment house IW Capital.
The report, shared with Express.co.uk, cites lack of understanding and informed investment decisions, coupled with lack of confidence in Bitcoin and other digital currencies among the UK investor community.
As per the report:
“The data reveals that, fundamentally, Brits do not have enough information or knowledge on the topic of cryptocurrency. In fact, many have no knowledge about the subject whatsoever.”
Moreover, the report indicates that nearly 3 million Brits (1 in 20) have invested in cryptocurrencies, but only 5% of those took professional financial advice before doing so.
Commenting on the report’s findings, Luke Davis, CEO of IW Capital, said:
“It is shocking, but not surprising, to see so much confusion around the topic of cryptocurrency. I do not believe this is a reflection of UK investors’ risk profile, as a positive appetite for alternative finance remains, but to see that investments have been made without proper financial advice and a lack of facts and education is very concerning.”
This trend, however, is not limited to the UK. Earlier this year, a survey by COBINHOOD showed that only about 50% of Americans know what cryptocurrencies are.
These findings are hardly surprising. The crypto market rise last year was meteoric, with leading cryptocurrency Bitcoin going from $1,000 in January 2017 to $20,000 in December, garnering massive media coverage and attention.
Amidst the frenzy, many eagerly joined the bandwagon with hopes of profiting from the seemingly unstoppable surge in prices, with little regard for risk management and due diligence. The ride, however, came to an end in January 2018, and the crypto market as a whole continued to tumble when Bitcoin dropped to around $6,500.
This month, Bitcoin managed to record some gains and cross the $8,000 mark, giving investors hope that another bull run is in the works, but that is little consolation for those who bought in around $20,000.
While the potential for profit in an emerging asset class like cryptocurrencies is big, the risks are bigger, and participants are always advised to conduct their own research before investing.