Taking a gamble and curiosity are top reasons for buying crypto, says Dutch watchdog

People who invest in cryptocurrency mainly do so either as a wager, or out of curiosity, said the Netherlands Authority for the Financial Markets (AFM) based on research conducted among cryptocurrency investors aged sixteen and older. According to that study, most investors in digital currencies try to keep the risks low, but young people are more risk-taking.

According to the researchers, more than half of the surveyed crypto investors use less than a thousand euros when speculating. More than a quarter invested 1,000 to 5,000 euros, while people spending 10,000 euros or more is somewhat rare. Family, friends, acquaintances, colleagues and neighbors play the most important role in choosing which crypto coins to buy or sell, the study showed.

Most owners of digital currencies, such as bitcoins and ethereum, are between 25 and 45 years old and the majority are men. A sharp fall in the value of crypto tokens seems to trigger financial problems in young people more often than among investors aged 45 and older.

Furthermore, a group of about one in ten crypto speculators said they own digital coins bought with borrowed money. This increases to nearly 20 percent when looking just at younger age groups, according to the study. They are taking a significant risk, as a sharp fall in the value of the crypto investment can make it more difficult to repay the loan.

The AFM regularly warns about the risks associated with investments in digital currencies. Cryptocurrencies, unlike bank balances, are also not covered by the deposit guarantee scheme. As a result, there is no financial safety net for consumers who become unable to access their funds kept in different accounts.

The prices can also show excessive fluctuations in value. This year, cryptocurrencies have fallen sharply in value and there is a great deal of unrest on the market, partly due to the collapse of the FTX cryptocurrency exchange.

According to the AFM, the majority of crypto investors are aware of the regulator's warnings. The European Union is working on regulations for the cryptocurrency market, but that is not expected to come into effect until 2024. The market will likely face more scrutiny and supervision as a result of the new rules.