The Hong Kong Investment Commission (CIC) collaborated with the Hong Kong Polytechnic University’s Department of Applied Social Sciences to understand the complex behaviors of cryptocurrency investors. The resulting study revealed common thought patterns among Hong Kong’s crypto investors, laying the groundwork for the recently published Individual Investor Study 2023, which provides a deeper investigation.
Findings from the PolyU study shed light on various cognitive biases influencing crypto enthusiasts’ investment decisions. These include the availability heuristic, where investors rely on readily available information, and the emphasis on historical data such as initial offering prices, with a particular focus on overconfidence.
The study also highlighted five distinct emotional states in crypto investors, categorizing them as “team building and community following,” “obedience,” “self-experimentation,” “intuitive price boosting,” and “wishful thinking.”
CIC’s Individual Investor Study 2023 explores the motivations driving crypto investments. Approximately three-quarters of the surveyed investors cited short-term return seeking (75%), viewing cryptocurrencies as a trendy investment (74%), and fear of missing out on opportunities (73%) as their main motivators.
Despite most investors displaying robust financial knowledge, the study emphasizes the need for continuous improvement and reassessment of financial behaviors and attitudes.
Independent of chosen investment products, the study recommends a rigorous three-step investment process for investors. It advocates for caution in asset protection, understanding the characteristics and risks of selected products to align choices with needs, and the final step encourages investors to regularly review and reflect on their investment behaviors and attitudes. In an era where cryptocurrencies are gaining significance, the insights from comprehensive studies become invaluable tools for both investors and regulatory bodies.
The nuances of investor behavior, cognitive biases, and motivations outlined in these studies contribute significantly to fostering a more informed and resilient investor community. As the crypto investment landscape continues to evolve, following these insights becomes increasingly important for all stakeholders involved.