Crypto personality style: While the investing world is still primarily dominated by traditional asset classes such as stocks and bonds, there has been an increasing interest in alternative forms of investments like cryptocurrencies. The cryptocurrency market has proliferated in recent years, and it started to become a popular topic for many people.
We can measure its growth or performance with specific indicators; the cryptocurrency market is no different. One of these indicators is the sheer number of cryptocurrencies available on the market.
According to Investopedia, there are currently over 1300 cryptocurrencies. This volume means that investing in cryptocurrencies has become an attractive alternative for many people who have given up on traditional investment methods due to current economic conditions.
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Crypto personality style – Investment in cryptocurrencies
Cryptocurrencies are unique in many ways. One of these factors is the anonymity of cryptocurrencies, where transactions are conducted online without traditional financial institutions like banks or government oversight.
With more investors looking to alternative investment forms, it makes sense that there are also more studies on cryptocurrencies and how they work. On the site, Cryptorated, you can find many articles that provide insight into the world of cryptocurrencies. For example, you can find out about insider trading in bitcoins, how to invest in bitcoin stocks, or the difference between Litecoin and Dogecoin.
Cryptocurrencies are still largely unregulated (at least for now), which means that there are few studies on individual differences in cryptocurrency investment. One area researched is how individual differences can affect investment performance.
Crypto personality style – The Big Five personality traits
In this article, we’ll take a look at various ways in which your personality style could affect your investments, using the ‘Big Five’ model. This model focuses on five personality traits:
- Openness
- Conscientiousness
- Extraversion
- Agreeableness
- Neuroticism
Crypto personality style – Openness and cryptocurrency investment
Individuals who are open to new experiences tend to be more curious, creative and willing to experiment than individuals who are not open to new experiences. This would benefit most traders because they will invest in cryptocurrencies that have the potential for long-term gains rather than short-term gains.
For example, a more open investor would probably avoid investing in cryptocurrencies that they believe will decrease in value rapidly because they want to avoid wasting time researching something that might not be worth investing in. They prefer to invest in cryptocurrencies and digital assets that can go up in value over a long period, such as Ripple (XRP) or Stellar Lumens (XLM).
Investors considered open typically don’t want to spend too much time researching individual cryptocurrencies because they believe it is a waste of time. They are more likely to meet with other traders and discuss which cryptocurrencies might be worth investing in or how specific traders have managed to make gains on their investments.
Open individuals tend to enjoy researching and learning about new technologies and typically do not choose to invest their time or money into cryptocurrencies that they believe will decrease in value rapidly. For example, a more open investor would probably avoid investing in cryptocurrencies that have had significant price decreases compared to where they started at the beginning of 2018 because it will cause them to waste valuable research time, which could be better spent on cryptocurrencies that have more potential.
More open investors typically enjoy learning from other traders, talking to them about how they have been successful in their cryptocurrency investments and gathering information online from websites such as Reddit or Telegram. They want to invest in a cryptocurrency with a large community of users and developers to learn more about it and its potential value in the future.
Crypto personality style – Conscientiousness
Conscientious individuals tend to be more detail-oriented and methodical in their approach to problem-solving. One key characteristic of conscientious people is that they tend to be proactive rather than reactive when problem-solving. This is often referred to as having a “long-term” or “big-picture” mentality, where they put in more effort to achieve their long-term goals.
As opposed to conscientious people, non-conscientious people are more impulsive and tend to act on the spur of the moment. For example, some investors will buy cryptocurrencies on a whim when they see the value is low and attempt to sell it during a period of high volatility when its value is at its highest. They fail to plan for the future and act impulsively rather than plan their actions. This can lead them to riskier investments or a loss of their investment.
Conscientious individuals are typically reliable, organized, careful and responsible. These traits would benefit investors who want to be more successful when investing in cryptocurrencies. If an investor is less likely to make impulsive decisions, they will generally invest only when they know that they can make money. This would also mean that they will avoid costly fees associated with investing and be more likely to protect their investments.
- Conscientious investors might invest more significant amounts of money than others and take fewer risks, leading to them achieving better success in investing. However, it is possible that it could lead to overthinking past decisions and causing regret, which is why every individual needs to find a balance between being over-or under-confident when investing.
- Conscientious cryptocurrency traders invest more significant amounts of money, take fewer risks and avoid costly fees. An example of this would be having the self-control necessary only to invest when the value of cryptocurrency is low and reduce the risk of losing money due to fees.
- They typically buy cryptocurrencies that have a bright future, such as Bitcoin (BTC), Ethereum (ETH) or Stellar Lumens (XLM). For example, a conscientious investor would prefer to invest in a cryptocurrency that has been around for a longer time than other cryptocurrencies because they believe it will have more value in the long run.
- Conscientious investors typically spend a long time researching cryptocurrencies and reading up about them online to gather as valuable information as possible before making an investment decision. They prefer to talk with other traders about the potential future value of specific cryptocurrencies.
- Conscientious individuals typically enjoy learning about cryptocurrencies online through reliable websites such as CoinMarketCap, where they can read several pages of information before deciding if it is worth researching further or not. They decide on which cryptocurrencies to invest in by reading the whitepaper and talking with several experienced traders before making their final investment decision.
Crypto personality style – Extraversion/introversion
One of the recent studies to look at individual differences in terms of cryptocurrency investment reported that extraverted investors could be more likely to make risky trades, resulting in significant losses or gains depending on market conditions. On the other hand, introverted individuals tend to be more meticulous in considering every possible aspect when they make a decision. In crypto trading, this can mean that introverted investors analyze the market conditions before making any trades. This is often referred to as HODLing, an acronym for “hold on for dear life”.
When it comes to investing, extraverts tend to express their energy outwardly, whereas introverts tend to express their energy inwardly. An example would be an extravert being more outgoing when speaking to other people about investments, whereas an introvert would be more comfortable investing in private.
Being an extravert is beneficial for investors interested in speaking with other crypto traders. This trait would allow them to make money by successfully teaching others how to trade. It would benefit those who don’t like meeting new people because they can invest through the internet without interacting with others in person.
Investors who are extraverts might want to speak with a peer-to-peer trader to increase the chances that they will be able to sell or buy when prices begin to change. In contrast, introverted investors would do better speaking with a financial advisor about investing in cryptocurrency. They have lower risks associated with their investments and can use the internet to avoid talking with peers.
Crypto personality style – Introversion and cryptocurrency investment
Investors who are introverted tend to be reserved, enjoy their own company and prefer not to spend too much time socializing. They typically choose cryptocurrencies that they can hold onto for long periods without worrying about their value dramatically decreasing, such as Bitcoin (BTC), Monero (XMR) or Dash (DASH).
Introverted individuals typically choose to invest in cryptocurrencies that they believe will increase in value over a long period. They spend their time learning about cryptocurrencies online and don’t prefer to attend meetups or talk with other traders because it takes up too much of their valuable research time.
Crypto personality style – Agreeableness and cryptocurrency investment
Agreeable individuals are typically trusting, helpful, generous and sympathetic, so they tend to not think badly about many people. This would benefit most traders because they avoid taking risks associated with making mistakes when trading cryptocurrencies. For example, if a trader is more agreeable, they are less likely to try and sell or buy at the wrong times because they will avoid doing anything which might hurt another person’s feelings.
This is beneficial for cryptocurrency traders who invest through peer-to-peer exchanges where it is possible to avoid institutions entirely. Investors that are more agreeable are less likely to invest in cryptocurrencies that could potentially be scams or might end up losing money.
Agreeable individuals tend to be more cooperative and sympathetic than individuals who are not agreeable. These traits would benefit most traders because they will invest in cryptocurrencies that everyone can agree on, such as Bitcoin or Litecoin. They will avoid paying expensive fees and investing in potentially fake cryptocurrencies.
An example of this would be an investor who is more agreeable to investing in a cryptocurrency that everyone can agree. Such an investor wouldn’t want to spend too much time researching individual cryptocurrencies or avoiding the risk of losing money because of investment mistakes.
Individuals who are not agreeable typically don’t care about other people’s feelings and will not invest in cryptocurrencies that everyone can agree on because they want to take more risks. An example would be an investor who is disagreeable wishing to invest in a cryptocurrency that has the potential to go up, regardless of how painful it might be for their clients.
Crypto personality style – Neuroticism and cryptocurrency investment
Individuals who are neurotic tend to experience emotional instability, including anger, anxiety and depression. This would benefit most investors because they can avoid investing in cryptocurrencies that might end up causing them stress or making them feel worried about the amount of money that has been invested.
For example, an investor who is neurotic could choose not to invest in cryptocurrencies that could potentially decrease in value quickly because the volatility might cause them to become anxious. They are more likely to take time away from investing if they are not comfortable with how much money has been invested into cryptocurrencies.
Investors who are considered neurotic typically don’t want to spend time learning about cryptocurrencies or how they work because they are concerned about rapidly losing money. For example, an investor who is neurotic would never try to sell or buy too quickly to avoid losing money and triggering negative emotions such as anxiety or anger.
Investors who are neurotic typically do not enjoy talking with other traders because of the high risk associated with cryptocurrency investment and do not like meeting new people. They want to invest in cryptocurrencies that are tried and tested and will only make purchases if they have done extensive research about the risks and benefits of investing in a particular cryptocurrency, such as Bitcoin.
Crypto personality style – Conclusion
Cryptocurrency is an exciting opportunity for investors, though it has unique challenges. The crypto space tends to attract more risk-takers, so understanding your personality style can be helpful when trading these types of assets. It should be no surprise that different personalities are drawn to cryptocurrency for various reasons.
Every person needs to determine what kind of investments they are comfortable with before making any decisions. Just because a particular asset or investment type is popular does not mean it’s the right fit for everyone. Knowing one’s psychological profile can help people understand their weaknesses and strengths when making money-based decisions, and it can help frame better investment decisions.
