Majority Of Retail Investors Not Concerned With Crypto Winter

On Jan 23, 2023

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A report by the social trading platform eToro has revealed that most retail investors are interested in investing in digital assets despite the recent bear market. The report showed that around 67% of retail investors were optimistic or had mixed feelings about the severe crypto winter reported in 2022.

Retail investors not concerned about the crypto winter

The eToro report titled “Retail Investor Beat” analyzed the sentiments of the crypto community regarding the downturn that has engulfed the market for over a year. 67% of the respondents said they had positive or mixed feelings about the market, while the remaining 33% said they were cautious about investing after the price dip.

Regarding demographics, 76% of the investors aged between 18 and 34 were positive or indifferent about the bear market. The number was at 60% for those aged above 55 years.

The younger investors were still optimistic about investing in digital assets despite the price crash, indicating that these investors are likely in the market for the long haul. The eToro report surveyed 10,000 crypto retail investors across three continents.

The Global Markets Strategist at eToro, Ben Laidler, opined that it was odd that two-thirds of retail investors remained indifferent despite the sharp drops seen in 2023. Nevertheless, it showed that this group was investing for the long term, with the 2022 bear market presenting an opportunity to purchase firms at low valuations.

Changing investor mindset

The first three weeks of 2023 have been marked by a notable recovery across the cryptocurrency market. Most cryptocurrencies are trading higher than they were in December. The recent report has attributed the renewed investor confidence in the crypto market to slowing inflation.

According to the report, at the end of the third quarter of 2022, 24% of retail investors deemed inflation the largest risk to their investment. The figure dropped to 22% by the end of Q4. The number of retail investors surveyed in the report who are still worried about inflation has dropped to 19%. 22% of investors believe that the main threat to their investment is a global recession.

Investors are adjusting their investment portfolios in readiness for a recession. Investors are hedging against a recession risk by investing in sectors such as healthcare, utilities, consumer goods, and energy.

“There was also a significant dash for cash in the final quarter as banks worldwide continued to pass on better rates to savers, albeit slowly, and investors kept some powder dry for market opportunities ahead.

One of the key reasons why prices dropped in 2022 was the aggressive interest rate hikes by the Federal Reserve and other central banks to tame inflation. However, the inflation levels are now easing, and there are speculations that the Fed will slow down interest rate hikes before pausing the hikes completely.

The Fed will hold its next meeting at the end of January, and the results of the meeting will be reflected in the performance of financial assets, including cryptocurrencies.

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