Exploring cognitive biases and external factors in cryptocurrency investment through an extended TAM framework

The growing interest in cryptocurrency investment is fueled by promises of high returns, amplified by media narratives and technological novelty. However, this enthusiasm often overlooks significant risks, including market volatility, fraud, hacking, and regulatory uncertainty. Cognitive biases, such as the Ostrich Effect (ignoring negative information) and Pro-Innovation Bias (overestimating the benefits of new technologies), distort decision-making. This study aims to identify the psychological, social, and knowledge-based factors driving cryptocurrency investment and develop strategies to mitigate risks through better financial education and investor protection. Using an extended Technology Acceptance Model (TAM), this research integrates three external factors—social influence, financial knowledge, and future perspectives—to explore how these variables shape perceptions of cryptocurrency’s usefulness, ease of use, and investment intentions. A multi-method approach was employed: Qualitative Phase: Two focus groups (N=16) were conducted, one with inexperienced participants and one with experienced investors, to explore motivations and biases. Quantitative Phase: A survey of 306 (N=306) participants aged 18–35 measured sociodemographic variables, FOMO, economic literacy, self-assessed financial knowledge, and cryptocurrency confidence. Statistical analyses, including correlations, regressions, and mediation models, were performed using SPSS to test theoretical pathways and identify causal relationships. The extended TAM model explained 49.4% of the variance in investment intentions. Key findings include: 1. Stronger social influence increased investment intentions and perceived usefulness, emphasizing the role of societal trends and peer approval. 2. Self-assessed financial knowledge positively correlated with investment intention, though further analysis revealed this often stemmed from overconfidence rather than actual expertise. In contrast, higher objective financial literacy was associated with more cautious behavior. 3. Optimism about the long-term future potential of cryptocurrencies strongly influenced people’s intention to invest more. 4. Perceived ease of use had little effect, while perceived usefulness, driven by external factors, was a stronger determinant of investment intentions. The findings highlight the need for better financial education to address gaps between perceived and actual knowledge, as well as to counteract cognitive biases. Mediation models provided preliminary evidence of causal pathways, showing how external factors indirectly shape investment intentions through perceived usefulness. This study contributes to literature by extending TAM to include psychological and social variables, highlighting the risks of overconfidence, and offering practical recommendations for promoting informed, secure investment practices. These include targeted education programs, portfolio diversification, and greater regulatory awareness.