Investing and trading are emotional pursuits and many of the mistakes retail market participants make can be tied to emotions. For example, many ordinary investors are apt to commit “sins” such as buying high and selling low and making temporary mistakes permanent.
These afflictions and others are commonplace in the world of cryptocurrency, indicating exchange traded funds such as the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC) can be ideal avenues for crypto participation for a wide variety of market participants.
Arguably, BLKC checks several of the boxes investors should be looking for in terms of accessing digital currencies without having to directly invest in an individual asset. This is an important attribute when it comes to tempering emotions that can be harmful to investor outcomes.
In Crypto, Emotions Matter
Underscoring the utility of BLKC is a recent survey by blockchain firm GNY.IO, which polled global retail traders that trade at least $5,000 monthly. The polled revealed respondents confessed to attributing 22% of losing trades to emotions.
Furthermore, 90% of those polled admit emotions creep into their crypto trading at some point and 26% admit emotion is the primary source of trading decisions.
“Its research found 90% of traders say emotion and general sentiment has some impact on their trading and that 74% say breaking news on the security, value and longevity is the biggest factor determining whether they trade or not. Around half (54%) say breaking news on companies involved in the sector such as the collapse of FTX or Genesis is the biggest factor while 51% say regulatory changes,” according to the poll.
There’s an obvious area where owning an ETF such as a BLKC makes sense for crypto exposure and it’s tied to damping emotions. Due to the fact that they have some cash parked in crypto accounts, many investors feel inclined to become frequent traders of that capital and opt to trade during turbulent market settings.
“Around three out of four (75%) say they look to trade during periods of increased volatility and liquidity such as when the US and UK markets are opening,” adds GNY.IO. “The study found 60% believe social content has a huge impact on crypto prices while another 32% believe it has quite a big impact. Just 7% say it has a limited impact on prices.”
With a variety of high-quality large-cap financial services and technology names, BLKC offers investors an equity-based approach. It can help in taking some of the emotion and edge out of investing in individual cryptocurrencies.
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