Crypto Investment: The Role of Investment Motivations, Investment Confidence, and Risk Perceptions

Abstract

In an era of increasing interest in cryptocurrency, this research delves into the psychological and behavioral factors influencing cryptocurrency investment and future cryptocurrency investment intentions. Analyzing data from the 2021 National Financial Capability Study and the Investor Survey, the study employs two logistic regression models to investigate the effects of investment motivations, risk perceptions, and investing confidence on cryptocurrency investments in a sample of 1,653 American investors. The findings revealed that motivations and investment confidence positively correlate to the choice to engage in cryptocurrency investments and the propensity for future investments. The risk perception of cryptocurrencies acts as a barrier, discouraging current investment behavior and future investment intentions in this class of assets. The integration of psychological factors into the examination of cryptocurrency investment has two important implications: 1) it enhances the accuracy of investor profiling, and 2) it heightens the awareness of motivational factors, enabling financial advisors and planners to provide personalized guidance that addresses the cognitive and emotional motivations associated with investing in a market as volatile as cryptocurrency.