Crypto Investors Look for Excitement

Crypto Investors Look for Excitement

By Benson Toti - min read
Updated 21 March 2023

A new study into trading activity states that crypto investors look for thrills. The paper is called Are Cryptocurrency Traders Pioneers Or Just Risk-Seekers? Evidence From Brokerage Accounts. What evidence does it contain that people who invest in cryptocurrencies look for excitement?

Matthias Pelster, Bastian Breitmayer and Tim Hasso are the people behind the study. It was published in the Economic Letters journal for September. Some fascinating facts and figures can be found in here.

Do crypto investors take more risks?
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What Is the Overview?

The researchers looked at people who deal in the stock market. Their results showed that they tend to take more risks once they also become crypto investors. They went on to say that these people seem to be “driven by excitement-seeking”.

The report mentions that certain things happen to their trading on the stock market when they get involved in crypto investing. To be exact, this sees them “increase their trading intensity and use of leverage.”

So, stock market traders change how they operate just because they discover cryptocurrencies. It seems like an unusual way for people to react. So, what do the figures show in this respect?

Some More Figures on Crypto Investors

They carried out the study from the start of 2014 to the end of 2017.  More than 668.000 investors weres assessed to gather information on trading habits.What can we see from the results?

The group say that investors change their habits. This happens in the first 10 days after investing in cryptos. These changes include a 13.4% increase in the use of leverage. Investors also carry out an extra 16.8 stock market trades in that time.

Another interesting fact showed that crypto investors between 35 and 44 made the biggest increase in their leverage. Traders aged between 25 and 34 came after that group.

What Does It Mean?

Does investing in volatile cryptocurrencies cause traders to lose some of their risk-averse nature? Or does this show that they are simply more open to new ideas? Perhaps these investors were always greater risk-takers and choosing cryptos gave them a greater sense of freedom? Without more details, it is difficult to understand why these two issues should be linked.

The volatile nature of many cryptocurrencies will continue to attract risk-takers. However, the arrival of stablecoins based on fiat currencies and commodities like gold could see the market change in the future.

It is possible that more traditional investors will now choose to invest in stablecoins. This could be currencies such as Tether and Facebook’s Libra. After all, not everyone is looking to gain huge profits in a volatile market.