Recent research from IW Capital found that 38 percent of the British population do not “understand” cryptocurrency. Furthermore, a mere 5 percent of those cryptocurrency investors polled have actually turned a profit — a fact the investment house’s CEO finds “very concerning.”
A Fundamental Lack of Information or Knowledge
British investors do not understand cryptocurrency, according to recent research from IW Capital. The Mayfair-based SME investment house shared the research with Express.co.uk.
The report surmises that the vast majority of the UK investing community finds investing in cryptocurrency to be a worse decision than investing in traditional markets.
The investment house polled 2,0007 respondents, 38 percent of which said they do not understand cryptocurrency. Additionally, one-third of respondents are under the impression that the supposed bitcoin bubble will soon burst, while a mere 7 percent believe cryptocurrency investments are better those made through traditional channels.
According to the research, only 5 percent of cryptocurrency investors have turned a profit — a statistic likely skewed by the fact that more than 2.5 million Brits have “casually invested in cryptocurrency without fully understanding the investment.” (Which is the fastest way to lose money, especially in a bear market.)
Failure to Seek Financial Advice
Indeed, it is the fundamental lack of knowledge which is largely responsible for the aforementioned results. According to IW Capital:
The data reveals that, fundamentally, Brits do not have enough information or knowledge on the topic of cryptocurrency. In fact, many have no knowledge about the subject whatsoever.
Losses have also been compounded by failing to take proper investment precautions, such as consulting a financial advisor. The investment house also noted:
Despite a widespread dearth of knowledge surrounding this particular asset class, disconcertingly, 1 in 20 Brits – nearly 3 million – have invested in cryptocurrency without fully understanding it, with only 5 percent having taken advice from a financial adviser when investing in cryptocurrencies.
Only 5 percent of those who have invested in cryptocurrency have made financial gains. 11.5 million have failed to make a financial gain when investing in a cryptocurrency.
IW Capital CEO Luke Davis also told Express.co.uk that the results of the research are “very concerning,” explaining:
It is shocking, but not surprising, to see so much confusion around the topic of cryptocurrency. I do not believe this is a reflection of UK investors’ risk profile, as a positive appetite for alternative finance remains, but to see that investments have been made without proper financial advice and a lack of facts and education is very concerning.
This news might not come as much of a surprise, however, as the number of first-time investors into the cryptocurrency space during the holiday season’s ‘bubble phase’ has been well-documented. Many of those who jumped aboard the bitcoin bandwagon in December have since gotten rekt and shaken out of the market.
The results are also further proof that one should always do his or her own research and due diligence before investing in cryptocurrency, and should never invest more than he or she can afford to lose.
What do you think of IW Capital’s research and results? Let us know in the comments below!
Images courtesy of Shutterstock, Bitcoinist archives.