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According to a new study by the University of Cambridge, less than 10% of cryptocurrency investors could accurately answer basic questions about the stock market. This highlights how much work is left to be done in order for blockchain and cryptocurrencies to reach mainstream adoption.
The “cryptocurrency stocks to buy 2021” is a report published by the “Financial Times.” It states that investors in cryptocurrency are not as well-informed about basic stock market knowledge.
The online casino reviewer GamblersPick talked to over 1,000 individuals who had invested at least once in order to assess retail investors’ stock market understanding.
According to the findings of the study, those who hold cryptocurrency scored much worse than those who did not.
According to the findings, 70% of digital investors have invested in Bitcoin (BTC), while 39% have invested in Litecoin (LTC), the second most popular currency.
Top Portfolio Selections
The participants were initially questioned about their investments, and it was determined that 69 percent of them possessed cryptocurrency.
In addition, the survey looked at the most popular stocks and cryptocurrencies among retail investors.
“In the previous six months, GameStop was the most favored stock among our respondents. According to the article, “a third of investors have poured their money into this business,” with BlackBerry, another “meme stock,” coming in second.
In terms of cryptocurrencies, the world’s biggest currency emerged as the most popular by far, with 70% of digital investors claiming to have purchased Bitcoin.
While 39 percent of those polled claimed they purchased Litecoin, 37 percent said they bought Ethereum (ETH).
How much do beginner investors know about investing?
“Swaths of new investors have joined the stock market since the epidemic, with first-time investors now accounting for 15% of all retail investors,” the research said, as it addressed the most prevalent knowledge gaps.
Despite the fact that the GameStop craze was fueled by a short sale, 83 percent of respondents failed to correctly identify the “short selling” term in a multiple choice question.
Short selling is the practice of borrowing and then selling a stock.
If the price performs as expected, traders may repurchase the shares at a lower price and keep the difference.
Furthermore, the majority of individuals couldn’t identify the right definition for the acronym GME, with 73% of respondents mistaking it for a “ticker sign.”
More over half of the investors couldn’t describe what the terms “ask” and “bid” meant.
In basic terms, the “bid” price is the highest amount a buyer is willing to pay for a stock, while the “ask” price is the lowest amount a seller is willing to accept for the same stock.
When respondents were asked to define “hedge funds,” “mutual funds,” and “exchange funds,” more similar knowledge gaps emerged.
The research said that “what made the actual difference was whether or not a person held cryptocurrency,” adding that those who did not outperformed those who did.
One probable cause, according to GamblersPick, is that cryptocurrency attract to younger and less experienced investors.
It’s also possible that crypto investors are opting out of the regular stock market entirely and have no interest in learning about it.
In addition to identifying knowledge gaps, the poll looked at overall attitudes regarding the stock market and investing, finding that 67 percent of respondents believe the stock market is similar to gambling.
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The “stock market graph” shows that investors who are new to the stock market, have a hard time understanding what is going on. The article claims that this issue is due to lack of basic knowledge.
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