The world of cryptocurrency holds fascination for many, a perplexing enigma for some, and an alternative investment strategy for others. But, is there more to this digital currency than meets the eye?

A recent study dives into the intricate mesh of politics, psychology, and social traits that appear to define cryptocurrency enthusiasts.

In the whirlwind digital landscape, this study provides a beacon for understanding the diverse characteristics of crypto owners.

The enigma of cryptocurrency

Launched into the annals of the finance world, the cryptocurrency market, with its hallmark features of anonymous trading and unregulated markets, gained swift momentum.

Despite a reputation of financial unpredictability in some circles, it boasts hundreds of millions of worldwide investors who beg to differ.

The said study sets out to demystify the crypto enthusiasts’ cluster, seeking to differentiate them from non-crypto investors based on certain political, psychological, and social traits.

Past research with narrower sample sizes hinted at these investors treading the paths less traveled – psychologically non-normative and politically non-mainstream.

Defining the cryptocurrency aficionado

In a significant leap from previous studies, an extensive survey involving 2,001 American adults was conducted in 2022.

Approximately 30% of these respondents were current or former crypto owners. They self-reported demographic details and other responses that painted a vivid picture of their political leanings, psychological nuances, and social traits.

A detailed statistical analysis ensued, encompassing bivariate (two-variable) correlational analyses and a multivariate (multi-variable) regression analysis.

This helped measure the strength of association between crypto ownership and other individual variables, ultimately leading to the identification of variables critical in predicting cryptocurrency ownership.

The psychology of the crypto investor

The analysis revealed intriguing associations. Cryptocurrency ownership correlated with a belief in conspiracy theories, support for political extremism, and affiliation to non-left-right political orientations (such as Christian nationalism).

Crypto investors were also more likely to self-report the “Dark Tetrad” of personality traits: narcissism, Machiavellianism, psychopathy, and sadism.

A broader, more holistic analysis pinpointed the qualities that are most likely to predict crypto ownership. The strongest association was found with reliance on fringe social media sources for news.

Other associated traits included masculinity, argumentativeness, higher income, and a heightened sense of victimhood.

Interestingly, political orientations and identities reported by crypto owners spanned a wide spectrum from left to right.

Caveats and the way forward

The researchers, hailing from the University of Toronto, Canada, and the University of Miami, USA, caution against broad generalizations.

The results are inevitably restricted by the sample characteristics and self-reported data, eschewing any causal interpretations.

The conspicuous association between social media and crypto ownership warrants further examination into the specific media and rhetoric’s impact on crypto ownership.

“Though our results certainly do not apply to every crypto user out there, on average, we found that crypto investment and ownership tends to appeal to people who are more argumentative, anti-authoritarian, and prefer to get their news from non-mainstream social media sites,” noted the researchers.

Cryptocurrency and traditional financial systems

As cryptocurrency continues to grow in popularity and significance, its impact on traditional financial systems cannot be overlooked.

Financial institutions, once skeptical of digital currencies, are now exploring ways to integrate blockchain technology and digital assets into their operations. This shift is driven by the increasing demand for more transparent, efficient, and secure financial transactions.

Regulatory challenges and innovations

The rise of cryptocurrency also presents significant regulatory challenges. Governments worldwide are grappling with how to effectively monitor and control this new financial frontier.

Balancing the need for regulation to prevent illicit activities while fostering innovation remains a delicate task.

In response, some countries are developing frameworks to regulate cryptocurrency exchanges and Initial Coin Offerings (ICOs), aiming to protect investors while encouraging technological advancements.

Future of cryptocurrency and traditional finance

The future relationship between cryptocurrency and traditional finance is still unfolding. While some predict a harmonious integration, others foresee ongoing tensions as traditional systems adapt to the disruptive potential of digital currencies.

Regardless of the outcome, it is clear that cryptocurrency is reshaping the financial landscape, challenging long-held notions of money, value, and economic power.

The study is published in the journal PLoS ONE.

—–

Like what you read? Subscribe to our newsletter for engaging articles, exclusive content, and the latest updates. 

Check us out on EarthSnap, a free app brought to you by Eric Ralls and Earth.com.

—–

The cryptocurrency market experienced a substantial downturn on Friday, compounding the selling pressure witnessed over the past two weeks. The leading cryptocurrency, Bitcoin (BTC), retraced over 20% from its highs in June and May, dropping as low as $53,500. 

The market decline was largely attributed to the long-awaited trustee overseeing the Mt. Gox bankruptcy, who announced the commencement of Bitcoin and Bitcoin Cash repayments to creditors affected by the infamous hack that resulted in billions in losses. 

As a result, the entire cryptocurrency market shed over $170 billion in combined market capitalization in just 24 hours.

Bitcoin Repayments And German Government Sell-Off

The trustee responsible for the Mt. Gox bankruptcy estate, Nobuaki Kobayashi, stated that Bitcoin and Bitcoin Cash repayments had begun through designated crypto exchanges. 

While the amount transferred to these exchanges was not specified, data from market intelligence platform Arkham revealed that 47,229 BTC, valued at $2.71 billion, had been transferred to an unknown address.

Related Reading

Kobayashi emphasized that the remaining funds would be returned to creditors once “specific conditions” were met, including verifying registered accounts and finalizing discussions with the designated exchanges. 

The decline in crypto prices led to substantial liquidations in the derivatives markets, with over 229,755 traders experiencing combined liquidations worth $639.58 million in the past 24 hours. Of this amount, $540.46 million represented long trades, indicating positions taken by investors expecting long-term asset appreciation. 

Additionally, the German government contributed to the market pressure by selling approximately 3,000 BTC, equivalent to around $175 million, from a seized stash of 50,000 BTC associated with the movie piracy operation Movie2k. Despite the sell-off, the government still holds over 40,000 BTC, valued at over $2 billion.

What Historical Price Cycles Suggest

Despite the ongoing bloodbath witnessed in crypto prices over the past month, industry insiders and analysts remain optimistic about Bitcoin’s future performance. 

Despite the short-term selling pressure resulting from Mt. Gox repayments, experts anticipate a rebound towards the end of the year. Crypto data and research firm CCData suggested that Bitcoin’s current appreciation cycle has not yet peaked and will likely achieve a new all-time high. 

Historical market cycles indicate that Bitcoin’s Halving event, which reduces the supply of new BTC, typically precedes a period of price expansion between 12 and 18 months. The most recent Halving occurred in April, suggesting potential further growth into 2025. 

Related Reading

Tom Lee, co-founder and head of research at Fundstrat Global Advisors, told CNBC that he predicts that Bitcoin will hit $150,000 despite the Mt. Gox overhang.

The launch of an Ethereum exchange-traded fund (ETF) in the US and the approval of the first US spot Bitcoin ETF earlier this year contribute to the overall positive sentiment in the market, indicating potential growth and further mainstream adoption of cryptocurrencies.

At the time of writing, BTC is trading at $55,680, reflecting a significant 21% drop in price over the past month. Bulls in the market are closely monitoring the $54,480 price level, representing substantial support for BTC. This level holds critical importance as it could prevent further price declines and the risk of breaking below the crucial $50,000 level.

Featured image from DALL-E, chart from TradingView.com