Most retail investors are still very much interested in investing in digital assets despite experiencing what is arguably the worst bear market in crypto history.
According to a recent survey report by the social trading platform eToro, more than two-thirds, approximately 69%, of retail investors revealed that they are positive or have mixed feelings about the impact of the growing market downturn recorded last year. The remaining one-third, approximately 31%, stated that they are wary of investing in the industry after the crash.
Commenting on this renewed interest from retail investors, eToro’s Global Markets Strategist, Ben Laidler, said:
“The fact that two-thirds of retail investors feel indifferent, or even more positive, after the worst year for markets in a generation might seem odd. But the majority of this cohort thinks in years and decades. For those with longer time horizons, the back end of 2022 has offered a chance to buy companies at lower valuations, improving the outlook for long-term returns.”
Investor Confidence Returns as Threat of Inflation Reduces
The report, which surveyed 10,000 retail investors from 13 countries and three continents, revealed that the biggest driver of renewed investor confidence in crypto investing is the dwindling fear of the perceived threat of inflation among investors.
The study found that at the end of Q3 2022, about 24% of retail investors considered the perceived threat of inflation the biggest risk to their investment portfolios.
However, by the end of 2022, the inflation worry had dropped to 19%, while about 22% of respondents cited the global recession as the main threat to their investment portfolios going forward into 2023.
As a result, many investors are adjusting their portfolios, with cash allocation climbing to 50% and adding more defensive assets like healthcare and utilities.
Young Retail Investors Prove More Risk Tolerant
The survey also found that younger investors have the least fear of the crypto market, while older investors looking at a looming retirement are more reluctant.
About 76% of young retail investors between the ages of 18-34 feel positive or indifferent about the downtrend, while only 60% of older investors above 55 years old feel the same way about the crypto market.
“2022 will have been the first major bear market for many less experienced retail investors, yet the data shows that it is older investors with shorter retirement time horizons who are feeling the strain the most,” the report added.