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One in three young people invest in cryptocurrencies promoted by their friends

One in three young people invest in cryptocurrencies promoted by their friends

The report said that the biggest motivator for new cryptocurrency buyers is a suggestion from a friend. By comparison, only 8% of new investors in traditional assets like stocks and bonds trust recommendations from their friends.

Nearly a third, or 31% to be precise, of new investors in cryptocurrencies in 2022 they used a friend’s recommendation as their main motivation to invest, according to a recent study.

The joint study was published by the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation and the National Opinion Research Center (NORC) at the University of Chicago, USA.

The report said that the biggest motivator for new cryptocurrency buyers is a suggestion from a friend. By comparison, only 8% of new investors in traditional assets like stocks and bonds trust recommendations from their friends.

The contrast is a sign of “a social element in investing in cryptocurrencies which is not evident in investing in stocks or bonds”, according to the study. Gary Mottola, co-author of this study, points out that it is not bad to be advised by friends, but it can become a “double-edged sword”.

Experts also point out that many of these beginners have used cryptocurrencies to later enter the traditional stock market, something that yes it can produce good results, according to Mottola. “Friends or profiles on social networks that recommend the crypto world may not be trustworthy,” she concludes.

Many personalities, such as actress Lindsay Lohan and rapper Soulja Boy, have been sanctioned by the Securities and Exchange Commission for having sponsored these assets without having legitimate knowledge. These types of profiles have been branded as “pseudo-experts” by the founder of Apex Financial Services, Lee Baker.

Baker points out that the main danger is being recommended by someone who does not know the risk and volatility of investments. As well as, receive advice at the peak of growth. “If you’re doing research on the world, I think that’s great,” Baker said. “If you’re blindly making decisions without doing any research, that’s a terrible idea.”

Source: Ambito

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