Retail Crypto Investment Surges Despite Volatility: IOSCO Report

Key Takeaways:

• Retail Crypto Ownership Surges: The IOSCO report highlights a significant rise in crypto ownership among retail investors, with some jurisdictions seeing over 30% crypto adoption by 2022, a sharp increase from previous years.
• Market Volatility Doesn’t Deter Investors: Despite setbacks like the 2022 “crypto winter” and major market downturns, retail investors continue to buy cryptos, showing resilience and growing interest.
• Younger Demographics Dominate Crypto Investments: Retail investors under 40, particularly in the US, are leading the charge into crypto investments, with many starting their financial journeys with digital assets.
• Key Motivators for Crypto Investments: FOMO (fear of missing out), speculative gains, low-cost entry points, and social media influence are driving retail investors to engage in the crypto market.
• Increased Regulatory and Educational Needs: IOSCO underscores the need for stronger regulatory frameworks and better investor education to manage the risks of market volatility, scams, and fraud in the growing crypto space.

Retail investors are showing an increasing appetite for crypto assets despite the high volatility and risks associated with the market. According to a recent report by the International Organization of Securities Commissions (IOSCO), crypto ownership among retail investors has surged over the past four years, with many still purchasing crypto despite market downturns and regulatory concerns.

The IOSCO report highlights significant growth in the adoption of cryptos. In 2022, 15 out of 24 surveyed jurisdictions reported that up to 10% or more of their retail investors owned crypto, while six jurisdictions showed crypto ownership of 30% or more. This marks a sharp rise compared to 2020, when half of the jurisdictions estimated that only 1-5% of their investors held crypto assets.

Read: India tops Crypto Adoption

Despite challenges like the 2022 “crypto winter” — a major downturn that saw market values plunge by 73% from previous highs — retail investors continue to show strong interest in the crypto market. IOSCO pointed out that these investors span both advanced economies and emerging market jurisdictions, signaling global interest in digital assets.

Key Risks and Concerns

While the adoption rate is rising, the report cautions that significant risks still loom over the crypto space. These include high market volatility, a lack of comprehensive investor understanding, limited regulations, and the prevalence of scams and fraud. These concerns are not new; they were first flagged in IOSCO’s 2020 report, which stressed the need for better investor education and protection measures.

Since 2020, the crypto market has seen several high-profile failures and bankruptcies and increased scams, hacks, and overall investor losses. Despite these setbacks, retail interest remains undeterred, and many continue to explore the potential of digital currencies. IOSCO emphasized that stronger regulatory oversight and investor education initiatives are needed to address these challenges.

Read more: When will crypto market bull run begin?

Retail Investors’ Demographics and Motivations

The report also provides insights into the demographics of retail crypto investors. The typical crypto investor is younger—usually under 40 years old—and predominantly male. In countries like the United States, nearly 60% of investors under 35 have considered investing in crypto, with over half of them already having made investments. Among Gen Z, particularly those aged between 18 and 25, around 44% have started their investment journey with crypto.

Increase in crypto ownership by jurisdiction over the past four years | Source: CoinTelegraph/IOSCO

New investors, as opposed to seasoned ones, are more likely to delve into the crypto market. The key motivations driving these investors include a fear of missing out (FOMO), speculative ambitions, low barriers to entry, and influence from social media and friends.

Conclusion: Crypto’s Growing Popularity Amid Uncertainty

The continued interest in cryptos among retail investors is evident, even as the market faces multiple challenges. The IOSCO report underscores the need for greater regulatory frameworks and educational initiatives to safeguard these investors. While the volatility of the market is a persistent concern, the crypto space continues to attract young and new investors seeking to capitalize on digital assets.

This upward trend suggests that despite setbacks, retail investors remain bullish on crypto, drawn by both its speculative allure and its increasing mainstream relevance. As the market evolves, stronger investor protection and education will be crucial to ensuring a safer and more informed investment environment.

Source: CoinTelegraph