Broadridge survey reveals how Canadian investors decide on cryptocurrency viability and risk
Cryptocurrencies may have come a long way from their early niche, but investors still judge them based on traditional metrics.
A new report from Broadridge Financial Solutions has discovered that most investors and prospective investors in cryptos prioritize metrics such as risks factors and security (54%), financial overview (e.g., cash flows) (52%) and holdings of the management team (43%) when making decisions.
This means they give less weight (16%) to crypto-specific metrics such as tokenomics, which considers factors such as how a token is created and distributed, supply and demand, and incentive mechanisms.
According to Binance: “Assessing a project’s tokenomics before deciding to participate is essential for investors and stakeholders.”
Network performance is another important factor that investors may not consider even though it can provide a real-time view on how the platform behind the crypto asset is performing, how holders are engaging with the platform, and the number of active projects
"The survey data reveal that many investors prefer traditional finance metrics and emphasize them over other factors that impact crypto specifically," said Dr. Chris Brummer, the Agnes Williams Sesquicentennial Professor of Financial Technology at Georgetown Law who conducted the survey among respondents in Canada, the US, and the UK.
Quick buck?
The survey reveals that 65% of investors said they are holding crypto assets as long-term investments, dispelling their image as speculators seeking a quick return.
Among Canadian respondents, long-term investment is the top reason for holding cryptos followed by frequent trading and exploring digital assets.
Almost half of poll participants said they are using their holdings to educate themselves in how crypto investing works, but Rob Krugman, Broadridge’s chief digital officer, says a better approach is needed.
"To help better inform and educate investors, metrics that track crypto asset performance should be standardized, better disclosed and made more easily accessible, especially for retail investors needing the most relevant information and support possible to make informed decisions," he said. "For any market to survive and grow, you need trust, and trust isn't possible without transparency."
Asked where they get information from, the main responses included the native website of the crypto provider (39%), a broker (35%), a crypto exchange (34%) and crypto press (32%).
