BUILDING TRUST AND LEGITIMACY
A study produced by FT Longitude for
FALSE BELIEFS CREATE MISTRUST
Many investors are uncertain about the legitimacy of digital assets
“Is this the real life?
Is this just fantasy?
Caught in a landslide,
No escape from reality”
Queen - Bohemian Rhapsody
BUILDING TRUST AND LEGITIMACY
THE PRIVATE WEALTH IN DIGITAL ASSETS STUDY 2022
Sentiments
FALSE BELIEFS CREATE MISTRUST
Many investors are uncertain about the legitimacy of digital assets
“Is this the real life?
Is this just fantasy?
Caught in a landslide,
No escape from reality”
Queen - Bohemian Rhapsody
No cause for alarm, no need to fear the scammer
72% of investors are moderately or highly interested...however, only 54% have invested in the past year. Why?
Biggest barriers to investing
High-profile crypto scams, such as Bitconnect and OneCoin, and more recent attacks on NFT marketplaces like OpenSea, have the power to frighten investors away.
Digital assets suffer from some common misconceptions. Although investors can navigate certain risks if they have an understanding of the investment landscape, many worry about fraud and cybersecurity.
Interestingly, fewer of our survey respondents say that market volatility is stopping them from investing – despite the current downturn demonstrating greater losses can result from turbulent markets.
Risk of fraud
Market volatility
Cybersecurity risks
Lack of understanding of digital assets
There are areas of digital assets where people do try to commit scams that undermine the industry. But the asset class overall and the technology, particularly Bitcoin, have great potential to benefit individuals and companies.
Director
European digital assets investment firm
of investors overall say they are put off by headlines that highlight fraudulent digital assets trading
of our sceptical investors say that negative news stories put them off
No cause for alarm, no need to fear the scammer
72% of investors are moderately or highly interested...however, only 54% have invested in the past year. Why?
Digital assets suffer from some common misconceptions. Although investors can navigate certain risks if they have an understanding of the investment landscape, many worry about fraud and cybersecurity.
Interestingly, fewer of our survey respondents say that market volatility is stopping them from investing – despite the current downturn demonstrating greater losses can result from turbulent markets.
There are areas of digital assets where people do try to commit scams that undermine the industry. But the asset class overall and the technology, particularly Bitcoin, have great potential to benefit individuals and companies.
Director
European digital assets investment firm
Biggest barriers to investing
High-profile crypto scams, such as Bitconnect and OneCoin, and more recent attacks on NFT marketplaces like OpenSea, have the power to frighten investors away.
Risk of fraud
Cybersecurity risks
Market volatility
Lack of understanding of digital assets
of investors overall say they are put off by headlines that highlight fraudulent digital assets trading
of our sceptical investors say that negative news stories put them off
What’s the reality?
Could investors’ lack of understanding be to blame for some of these fears? Sixty-nine percent of our sophisticated investors and 58% of our experimental investors blame poorly informed investors that expose themselves to risks for stopping the digital assets market from gaining trust and legitimacy. And according to the Federal Trade Commission, people being unfamiliar with how crypto works is a gift to scammers.
But research by Chainalysis found that, despite illicit crypto transaction volumes reaching their highest-ever level in 2021, transactions involving illicit addresses represented just 0.15% of total crypto transactions. So legitimate crypto is easily outstripping criminal usage.
Like any new and under-regulated area, crypto has attracted con artists who promise wild returns to naïve investors. This is why greater regulation is good news for investors who are keen to explore digital assets.
Drivers of adoption
Speculation drives digital assets uptake
Investors’ interest in the digital assets market is still partly driven by short-term goals: more than a third of our survey respondents say they are speculative investors.
The innate volatility of crypto can be very appealing to investors. Almost half of our respondents believe that digital assets offer better returns than traditional assets, and 46% say they would be prepared to hold digital assets even if they lose money – because they can be extremely profitable.
I think if you scrutinise equity markets, you'd see a lot of the same behaviour. People invested in dotcom stocks in a short-term manner, hoping to get rich quick. And I think that that's just a by-product of a market going through hyper-growth.
Co-Founder, venture capital firm Standard Crypto
A new generation of investors are turning away from the old ways
Sophisticated investors and young people are disillusioned by traditional finance, and this is leading them to digital assets.
More than half of our sophisticated investors say that abuse of government control through the banking system, debasement of paper currencies by monetary policies and disappointing performance of yield in traditional financial markets are factors increasing their appetite for digital assets investment.
Young investors aged 18–25 are particularly turned off by traditional finance. In our survey, they say that abuse of government control through the banking system is the leading factor in their increased appetite for digital assets investment.
But they do have concerns about digital assets. Top of their list are high trading fees, the unpredictability of regulators and lack of tax clarity. For those aged 55+, it’s fraud, cybersecurity and lack of understanding.
Sophisticated investors are frustrated by traditional finance
To what extent are the following trends increasing your appetite for digital assets investment?
What’s the reality?
Could investors’ lack of understanding be to blame for some of these fears? Sixty-nine percent of our sophisticated investors and 58% of our experimental investors blame poorly informed investors that expose themselves to risks for stopping the digital assets market from gaining trust and legitimacy. And according to the Federal Trade Commission, people being unfamiliar with how crypto works is a gift to scammers.
But research by Chainalysis found that, despite illicit crypto transaction volumes reaching their highest-ever level in 2021, transactions involving illicit addresses represented just 0.15% of total crypto transactions. So legitimate crypto is easily outstripping criminal usage.
Like any new and under-regulated area, crypto has attracted con artists who promise wild returns to naïve investors. This is why greater regulation is good news for investors who are keen to explore digital assets.
Drivers of adoption
Speculation drives digital assets uptake
Investors’ interest in the digital assets market is still partly driven by short-term goals: more than a third of our survey respondents say they are speculative investors.
The innate volatility of crypto can be very appealing to investors. Almost half of our respondents believe that digital assets offer better returns than traditional assets, and 46% say they would be prepared to hold digital assets even if they lose money – because they can be extremely profitable.
I think if you scrutinise equity markets, you'd see a lot of the same behaviour. People invested in dotcom stocks in a short-term manner, hoping to get rich quick. And I think that that's just a by-product of a market going through hyper-growth.
Co-Founder, venture capital firm Standard Crypto
A new generation of investors are turning away from the old ways
Sophisticated investors and young people are disillusioned by traditional finance, and this is leading them to digital assets.
More than half of our sophisticated investors say that abuse of government control through the banking system, debasement of paper currencies by monetary policies and disappointing performance of yield in traditional financial markets are factors increasing their appetite for digital assets investment.
Young investors aged 18–25 are particularly turned off by traditional finance. In our survey, they say that abuse of government control through the banking system is the leading factor in their increased appetite for digital assets investment.
But they do have concerns about digital assets. Top of their list are high trading fees, the unpredictability of regulators and lack of tax clarity. For those aged 55+, it’s fraud, cybersecurity and lack of understanding.
Sophisticated investors are frustrated by traditional finance
To what extent are the following trends increasing your appetite for digital assets investment?
Our study:
Why the world needs to learn about digital assets
Landscape:
Understanding the evolving landscape of digital assets
People:
What kind of investor are you?
Outlook:
Why more education will unlock the digital future
Article:
An upstart segment of entrepreneurial investors are leading the way
Article:
Why investment from established finance players is driving confidence
Article:
Governing rules are an essential step on the journey to financial legitimacy
ALL RIGHTS RESERVED © 2022 Matrixport Privacy Policy | Terms & Conditions
Our study:
Landscape:
Outlook:
Why the world needs to learn about digital assets
Understanding the evolving landscape of digital assets
What kind of investor are you?
Why more education will unlock the digital future
An upstart segment of entrepreneurial investors are leading the way
Why investment from established finance players is driving confidence
Governing rules are an essential step on the journey to financial legitimacy
ALL RIGHTS RESERVED © 2022 Matrixport | Privacy Policy | Terms & Conditions