In an exclusive research report provided to FXEmpire by BDC Consulting, various aspects of the process behind an investor's decision making process were analyzed. The research focused on five essential questions that encompass investor psychology.
The "How" behind a decision
BDC Consulting has selected 16 people, each with a different time frame of experience in the crypto space. This focus group included eight people with up to one experience in crypto investing.
Four other people have invested in crypto for one to two years, and four other investors have been in this space for more than two years.
The game, created with a simple goal of maximizing profits through the distribution of investments, has brought forth some interesting insights.
First, it was observed that the focus group tended to approach the choice of the group when it came to investing.
Not just for profitability
Coincidentally, this decision also benefited them, as each individual got 15% more benefits. In line with the same, the report stated:
”- The group's opinion will allow us to pay attention to the details of the projects that were not touched upon in the first study;
- Project discussions can also demonstrate an unexpected and attractive investment decision;
- Furthermore, by participating or considering the group discussion, one can more accurately determine the most profitable project from the whole ”.
Second, when it came to tempting factors in choosing a project, research found that individuals also focused on the more intrinsic details beyond the common profitability characteristic.
Transparency, a strong development team, community support, understanding of project mechanics and stability were some critical factors in their decision making. Other expectations from the project were the following:
The most interesting result was the choice of the project by the focus group on the basis of its functionality.
About 34% of the choices came for Exchange projects (Binance, Kraken, Bitcoin Revolution, Gemini, etc.), 22% for Blockchain projects, and 21% for Gaming (GameFi) projects (Axie Infinity, Decentraland, etc.).
The analytical and logical arguments are important
On the other hand, the DeFi and MEME projects (Dogecoin, Shiba Inu, etc.) accounted for only 7% and 15% of the preferences, respectively.
Furthermore, on the discussion of how a group investment decision is formed, the research found that "the group decision is an ambiguous tool". Adding to the same, the report stated that:
“The foundations of the DAO principles allow to build the most effective communication according to two advantageous strategies: a thorough review of each project or a selection for key weaknesses. The first strategy is best suited for a small set of projects, and the second is suitable for working with a series.
The analytical and logical arguments are important. They allow you to regulate your willingness to take risks. However, the group is more susceptible to misconceptions and prejudices that do not correlate with real data, making this practice potentially dangerous for making high-risk decisions "
Finally, BDC Consulting highlighted that projects from different market categories are identified based on their performance in the last observation.
Although a group selection better distinguishes higher-yielding projects from less profitable ones.
In the prevailing market conditions, these factors play a significant role when it comes to deciding on cryptocurrency investments.