While people purchase cryptocurrencies for differing reasons, Visual Capitalist, a digital media company, has compiled information concerning people’s decision-making behavior and future expectations of digital assets.
Investors see long-term potential in Bitcoin
According to Visual Capitalist, 41 percent of investors purchased Bitcoin because they “believe Bitcoin is a world-changing technology.” Another 22 percent see Bitcoin as “a long-term store of value like gold or silver.” Most cryptocurrency investors, therefore, understand the larger ramifications of Bitcoin and its potential future in the evolving financial landscape.
15 percent of investors were convinced by a friend, family member or a trusted source, while 14 percent see Bitcoin as a great investment as “the price is low and will go higher.” Only eight percent saw Bitcoin as a medium of exchange great “for transactions or purchases and less of an investment.”
Over 60 percent of investors became involved with cryptocurrency investing in 2017 while 56 percent of investors holding cryptocurrency plan to invest in more cryptocurrency tokens over the next 12 months.
Qualitative data like investor sentiment and reasons behind an investor’s decision-making process is important in an emerging and rapidly-growing market since there is an extremely limited quantitative data like historical averages or ratios available for analyses. In circumstances like this, when things go downhill, as Business Insider reported, “there is always the possibility of a mass exodus.”
Investors Willing to HODL
According to the Huobi Cryptocurrency Sentiment Index Survey, 77.9 percent of cryptocurrency investors during the end of March 2018, believed that the cryptocurrency market would increase over 30 percent over the next three years.
Alternatively, a poll from Lendedu in November 2017 revealed that most cryptocurrency investors would hold onto their Bitcoin for more than a year. More specifically, 12 percent would hold on for over ten years, while ten percent would hold on from seven to ten years. 22 percent would hold for a period of four to six years, with 40 percent holding on for one to years. Only 16 percent planned to sell their Bitcoins within the next year.
While the Huobi and Lendedu survey indicated most investors would hold onto Bitcoin for a lengthened period, the cryptocurrency industry is extremely volatile. For example, Bitcoin’s value changes frequently. A negative sentiment from the media can cause a significant fall in value for the coin while a positive one could increase its price in a short period.
Investors concerned about the security of cryptocurrency exchanges
As for cryptocurrency exchanges, the biggest concern for investors was the security of the exchange. Security is not a surprising concern since there have been many high-profile heists on cryptocurrency exchanges. Approximately $1.2 billion has already been stolen from cryptocurrency exchanges since 2017. The Coincheck hack alone in early 2018 already resulted in the loss of approximately $530 million.
As for Visual Capitalist’s data, 40 percent of investors’ biggest concerns was security. 37 percent saw high trading fees as a major problem while 36 percent saw insufficient liquidity as an issue. 33 percent noted response time from support teams was a concern while 22 percent said a lack of cryptocurrency pairs was a significant matter to account for. 21 percent commented on the user-friendliness and poor platform interface and 18 percent were concerned about high withdrawal fees. Only 9 percent saw no major concerns about cryptocurrency exchanges.