As Bitcoin trades near new highs, the level of financial literacy in the cryptocurrency community still leaves much to be desired, according to a new report. The crypto community’s financial literacy rate is estimated at 25%, lagging well behind the financial literacy average in the United States by half, according to a new study by the crypto gaming startup PiP World.
Released on November 26th, the report analyzed a survey of 12,045 anonymous responses from crypto market participants submitted from March 2022 to October 2024 through the platform Coinfessions. The study aimed to measure crypto financial literacy — an individual’s understanding and ability to make informed financial decisions — in percentages, referring to scores in ‘high’ and ‘medium’ levels of financial literacy.
Financial Literacy Rates by Segment
The report categorizes the crypto community into different segments, including whales (large investors), hodlers (long-term holders), speculative traders, day traders, and pump and dumpers. The results show that:
- Whales: With a financial literacy rate of 96%, whales demonstrate one of the highest rates in the study.
- Hodlers: Estimated to account for 11% of the mix, hodlers have a significant financial literacy rate of 80%.
- Speculative Traders: The largest crypto investor segment with a 29% share, has a financial literacy of 64%.
- Day Traders: Representing 6% of crypto investors in the report, have the lowest financial literacy rate, estimated at 27%.
- Pump and Dumpers: Estimated to account for a significant 18% share of crypto investors, are associated with a financial literacy rate of 45%.
The Urgent Need for Financial Literacy
PiP World CEO Saad Naja emphasizes the importance of addressing this issue: "The findings of this report highlight an urgent and undeniable truth — financial literacy in the crypto space is dangerously low." He adds that too many traders are ‘navigating blind’ in a rapidly evolving market, lacking the ‘foundational knowledge needed to succeed.’
Financial Literacy vs. Regional Rates
The study compares the crypto community’s financial literacy rate with regional rates of adults in 2024. While the crypto community’s financial literacy rate is only down 8% from the global financial literacy average, such a rate is still considered ‘dangerously low.’ According to Naja, this highlights an urgent need for education and awareness within the cryptocurrency space.
Regret and Losses: A Common Theme Among Crypto Investors
The study also suggests that seven out of ten crypto investors highlighted losses, while 76% of respondents expressed regret about their investment decisions. This emotional strain weighs heavily on the crypto community, which often self-confesses to being ‘reactive, impulsive and neurotic.’
A Call for Action: Improving Financial Literacy in the Crypto Space
As the cryptocurrency market continues to evolve at a rapid pace, it is essential that investors prioritize financial literacy. By educating themselves and others, individuals can make informed decisions and avoid falling victim to common pitfalls.
Additional Resources
For those interested in learning more about crypto financial literacy, PiP World’s report provides valuable insights into the current state of the market. Additionally, readers can refer to PiP World’s Crypto Competence Index 2024, a comprehensive resource for understanding the complexities of cryptocurrency investing.
Sources:
- PiP World’s Report on Financial Literacy in the Crypto Space
- Coinfessions Platform
- Saad Naja, CEO of PiP World
Note: The article has been updated to include a link to PiP World’s Crypto Competence Index 2024.
