cryptocurrency traders are prone to high risks in other markets

Economics Letters magazine conducted a study and found that traders who speculated in the cryptocurrency market tend to take higher risks in the stock market as well.

“We noticed that if a trader takes part in cryptocurrency trading, then he simultaneously demonstrates more risky behavior in the stock market, increasing the intensity of transactions and the amount of borrowed funds,” the publication says. Researchers noted that this behavior may be a sign of a desire to receive emotions, rather than diversify the investment portfolio.

For the study, we took the data of 668,067 traders who made transactions from January 1, 2014 to December 31, 2017.

On average, such traders made 16.8% more transactions in the stock market and increased leverage by 13.4% during the first 10 days of the start of speculation with digital assets. More risky were people aged 35-44 years, followed by a group of 25-34 years old.

It is known that cryptocurrencies are characterized by increased volatility compared to other financial instruments, which adds an element of uncertainty during trading with them. This is pushing bidders to accept higher risk. Analysts also drew attention to the fact that traders are prone to overestimate risks in the stock market at a time when volatility in the cryptocurrency market decreases. In this regard, they made the following conclusion: “If traders considered bitcoin a long-term investment tool, their behavior in the stock and cryptocurrency markets would be identical.”

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In September, ING Bank issued
A report entitled “From Cash to Cryptocurrencies: The Revolution of Money,” which states that crypto assets have yet to prove their worth.