Crypto literacy at ‘dangerously low’ levels, new report warns

From cointelegraph by Helen Partz

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 Nov. 26, 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.

In the report, PiP World measured 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 in the crypto space is “dangerously low”

While the crypto community’s financial literacy rate is only down 8% from the global financial literacy average, such a rate is “dangerously low,” according to PiP World CEO Saad Naja.

“The findings of this report highlight an urgent and undeniable truth — financial literacy in the crypto space is dangerously low,” Naja said.

He added that too many traders are “navigating blind” in a rapidly evolving market, lacking the “foundational knowledge needed to succeed.”

Crypto financial literacy rate versus regional financial literacy rates of adults in 2024. Source: PiP World

The study mentions that the emotional strain weighs heavily on the crypto community, which often self-confesses to being “reactive, impulsive and neurotic.”

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The study also suggests that seven out of 10 crypto investors highlighted losses, while 76% of respondents expressed regret about their investment decisions.

Whales and hodlers are among the most financially literate investors

According to the study, whales —  large crypto investors  accounting for 5% of the crypto segment mix — have demonstrated one of the highest crypto financial literacy rates of 96%.

Hodlers, or long-term cryptocurrency holders  — estimated to account for 11% of the mix — are also associated with a significant financial literacy rate of 80%, the study suggests.

Financial literacy rates by crypto community segments. Source: PiP World/Coinfessions

The report claims that speculative traders, which PiP World says to be the largest crypto investor segment with a 29% share, have a financial literacy of 64%.

On the other hand, day traders — those representing 6% of crypto investors in the report — have the lowest financial literacy rate, estimated at 27%. Pump and dumpers, which are estimated to account for a significant 18% share of crypto investors, are associated with a financial literacy rate of 45%.