As technology reshapes investment advice, understanding the psychology of fear becomes crucial for navigating modern markets and, undoubtedly, the investment landscape is undergoing a seismic transformation. Polymarket, Kalshi and now Trump’s, Truth social media platform, are revolutionising price discovery - through prediction markets to artificial intelligence managing portfolios, the tools available to investors have never been more sophisticated. Yet one constant remains - fear. That is, fear of losing capital, fear of missing opportunities, fear of making the wrong decision at precisely the wrong moment, etc. This primal emotion appears to affect billionaires and first-time investors alike, although perhaps not in the ways we might expect.

Trump’s social media platform gets in to booming predictions markets

Source: X

Conventional wisdom suggests that wealthy investors, cushioned by substantial assets, should take greater risks. After all, they can afford to lose more. However, research and market behaviour tell a more nuanced story. Studies from Bank of America reveal that whilst high-net-worth individuals may invest larger absolute amounts in volatile assets, their risk tolerance as a percentage of total wealth often decreases as fortunes grow. The wealthy have more to protect, and with that protection comes a sophisticated understanding of what can go wrong. The Royal Society reported : “In a panel of adults from France and the UK, we investigated the association between (lack of) resources and risk taking. We found clear evidence that having low resources is associated with a higher variance in risk taking “This is despite the fact that the wealthiest 10% of Americans own 90% of the stock market. Indeed, in the UK, over 70% of Lottery tickets are bought by people aged between 22 and 29 who, one suspects, are not wealthily successful business men and women. Paradoxically, those with less capital often embrace higher volatility in pursuit of transformational returns. It is not recklessness but rational desperation since modest returns on modest capital will not change someone’s financial trajectory. No surprise, this creates an investing class divide where the wealthy compound steady gains whilst the aspirational chase moon shots. So, if wealth does not necessarily correlate with better investment decisions, does education? The evidence is compelling - financial literacy programmes have demonstrated remarkable success in reducing fear-driven investment mistakes. A comprehensive study by NerdWallet found that investors who completed basic financial education courses were 40% less likely to panic-sell during market downturns and 60% more likely to maintain systematic investment strategies. But education alone is not sufficient; the most successful investors combine knowledge with emotional discipline, a trait that technology is increasingly helping to cultivate.

Source: NerdWallet

Enter prediction markets, the most exciting development in price discovery since the Chicago Mercantile Exchange opened in 1898. Platforms such as Polymarket, Kalshi and now Truth have emerged as powerful tools for aggregating collective intelligence - but they are not without risks, such as manipulation by wealth participants and/or bots, thin liquidity and that they have also been banned in some countries as predictions markets are deemed a form of gambling. Recent data shows that Kalshi captured 62% of prediction market volume in September 2025, processing over £500 million in weekly trading. Meanwhile, Polymarket, although currently restructuring its US market entry following regulatory settlements, maintains strong positions in international markets. What makes these platforms revolutionary is not simply their technology but their fundamental premise: markets aggregate information better than any individual analyst or forecasting model. When thousands of participants stake real money on outcomes, prices reflect collective wisdom in ways that polls and expert predictions cannot match: “Event contracts provide a maximally direct way to get exposure to events that affect businesses, people and the economy, and they provide the most accurate signal on what the likelihood of future events are,” maintains Jack Such from Kalshi’s Business Development team.

Moreover, the evidence increasingly favours crowds. During the 2024 US presidential election, Polymarket predicted outcomes more accurately across multiple states than traditional polling aggregators or pundit consensus. The National Hockey League’s (NHL’s) recent partnerships with

both platforms signal mainstream acceptance of prediction markets as legitimate information sources. But crowd wisdom is not infallible since markets can exhibit herding behaviour, particularly during periods of stress. The key advantage lies not in perfect accuracy but in dynamic updating; as

new information emerges, prices adjust instantly whereas analysts must reconsider, rewrite and republish their views. For investors, prediction markets offer a powerful tool for managing fear. Rather than relying on a single expert’s opinion or one’s own emotional state, market prices provide an aggregated, financially backed probability that can inform decisions without dictating them. Fortunately for Peter Thiel’s, Founders Fund, it invested $200million into Polymarket valuing it at $1 billion. Following on from this, ICE (Intercontinental Exchange), the parent company of the NYSE, agreed to invest up to $2 billion whereby pushing the valuation to $8 billion in October this year. Equally, the cryptocurrency markets, long characterised by speculation and volatility, are undergoing a fundamental transformation. Real-world asset (RWA) tokenisation represents crypto’s most promising pivot as a way to find true mass adoption as the technology that powers cryptos is being used to tokenise equities, bonds, real estate, commodities, etc. As explained by Polkadot: “The RWA tokenization market reached $24 billion in June 2025, up 380% in three years. McKinsey projects the RWA market size will reach $2 trillion by 2030, while Boston Consulting Group estimates tokenized assets could represent 10% of global GDP by 2030.” More remarkably, this is not speculative froth but institutional adoption - BlackRock, JPMorgan and Franklin Templeton are actively tokenising everything from US Treasury bonds to private credit to real estate.

Sources: Tokenmetric & IG Prime

So, why does this matter for fear management? Essentially, tokenisation solves liquidity problems that have historically trapped investors in illiquid assets. Real estate, private credit and collectibles traditionally required long holding periods but tokenisation enables fractional ownership and secondary markets, reducing the fear of being “stuck” in an investment. Projections suggest tokenised assets could reach between £4 trillion and £30 trillion by 2030. The wide range reflects uncertainty, not about adoption but about pace. What is certain is that crypto’s future lies, less in speculative tokens and more in bringing traditional assets onto blockchain rails. For investors seeking to participate in crypto whilst minimising volatility, staking presents an intriguing proposition. Rather than trading cryptocurrencies, stakers lock up assets to help secure blockchain networks, earning predictable yields in return.

Source: Kraken

Hence, the appeal is obvious: passive income without active trading. But is staking truly suitable for conservative, long-term investors? The answer depends on one’s own definition of both “long-term” and “conservative”. Staking mitigates some risks, particularly the emotional toll of day-trading, but introduces others. Smart contract risks, slashing penalties for validator misbehaviour and underlying asset volatility remain significant concerns. A more measured approach sees staking as a complement to, rather than replacement for traditional income investments. An investor might allocate 5-10% of a portfolio to staked assets, accepting higher volatility in exchange for yields that exceed most bonds, whilst maintaining core holdings in equities and fixed income. The key is understanding that staking rewards are denominated in the same volatile asset being staked. Earning 5% annual yield means little if the underlying asset falls 30%. This makes staking most suitable for those who already intended to hold cryptocurrencies long-term and view staking as an enhancement rather than a strategy unto itself.

This article first appeared in Digital Bytes (4th of November , 2025), a weekly newsletter by Jonny Fry of Team Blockchain.