Researching the Traders Behind the Cryptocurrency Mania

To better understand who invests in crypto and ICOs, why they do it, and how exactly they make trades, in late 2017-at the peak of the crypto mania-I set out to study people behind the billions in investment and speculative trading.

There are many kinds of crypto traders, from every stripe of the Silicon Valley "Crypto bros" to "Bitcoin moms" and "Crypto chicks." For the purposes of my research, I interviewed six hobbyist traders and six professional traders, who were typically managers of large funds that invest exclusively in crypto.

The results of this study suggest that this investment market presents numerous unique challenges, but that nonetheless, these traders see themselves as pioneers in an exciting new investment class.

Practically speaking, there are huge risks in every part of the investment: exchanges and wallets are frequently hacked or mismanaged, investment scams are rampant, markets and prices are easily and commonly manipulated, many markets are so "Thin" that trading is practically illiquid, usability and operations management are complex and error-prone, and trading fees are often high.

The professional crypto traders I spoke with seemed to work in a more individualist fashion than traditional hedge fund managers, who use a kind of distributed and social cognition, according to Donald MacKenzie's longitudinal research.

For the professionals, consulting and collaborating with other traders was limited, and in most cases non-existent.

Echoing a general and popular interest in ICOs during my interview period, hobby and professional traders alike sought ICOs extensively.

From the outside, the distinction between insider trading, venture capital funding, and crypto trading are very blurry and problematic.

Most traders told me that their participation in the crypto market, despite the risks, was a once-in-a-lifetime opportunity, and a way to create "Generational wealth."

Several traders also described the spirit of the market in terms of a "Wild west," and that their roles were as "Pioneers." Expectedly, all traders spoke of crypto investing with considerable enthusiasm and commitment.