Friends and FOMO pushed newbie investors to buy crypto in 2022 — Survey

Influence from friends and the fear of missing out (FOMO) were some of the reasons investors bought crypto for the first time in 2022, according to a survey by a United States financial regulator.

Published by the United States Financial Industry Regulatory Authority (FINRA) Investor Education Foundation in late April, the survey found that a large portion (31%) of new cryptocurrency investors cited friend suggestion as the primary reason for their foray into crypto.

This is compared to only 8% for first-time equities or bond investors, potentially indicating that there is a social element to cryptocurrency investing not evident in equities or bond investing, according to FINRA.

However, the ability to “start with small amounts” was the second biggest reason for making a move into the crypto market at 24%, similar to equities and bond investors.

Meanwhile, around 10% of respondents indicated a fear of missing out (FOMO) on a “potentially lucrative investment opportunity” led to them buying crypto for the first time, according to the survey.

The survey also found that 48% of crypto investors said they sourced information about the digital asset market from friends, family or work colleagues — compared to 35% for stock investors — followed by social media at 25%.

The survey also found that newer crypto investors were slighter younger on average (37 years old) and less college-educated (28.5% completed a four-year degree) compared to stock investors (43 years old and 46.3% with college degrees).

Interestingly, the study found that digital asset owners didn’t know as much about cryptocurrencies as they initially thought.

Digital asset investors scored 26.6% on a five-item quiz that asked questions about how a cryptocurrency is issued; transferred into U.S. dollars; how it is taxed; and how transactions may be “susceptible to fraud.

The 465 participants surveyed on Sept. 9 and 29 were randomly selected from U.S. households. The margin of error was 6.75%. The 2022 survey was part of a follow up survey from 2020.