Many retail crypto investors held their own through tough last year crypto winter. Younger age groups seem to be the most optimistic about the long-term potential of crypto. But will the conviction of holding such a volatile asset class last this year?
Investing in cryptocurrency tends to be a little more complicated than the traditional means, given its volatile nature. The asset class, which is still in its infancy, has encountered many obstacles. Given the newness of crypto, most enthusiasts urged newcomers to learn the basics and invest for the long term rather than betting on high-risk altcoins.
This “slow and steady” mood was mainly driven by factors such as the global COVID-19 pandemic after the traditional high-value equity sector took a hit. This prompted investors to explore other asset classes, crypto in the lead. Retail crypto investors have been heavily accumulate bitcoins since October 2021 as whale addresses have sold out.
This was also evident in a recent eToro report shared with BeInCrypto. The study surveyed 10,000 retail investors from 13 countries and three continents.
Perspectives from retail crypto investors
Retail investors are always optimistic about crypto and find renewed confidence as inflation softens. Despite the bear market, 67% of retail investors are either bullish or neutral on the crypto market. The rest wrote off the sector, given the rapid devaluation of the market last year.
Nonetheless, the uncertainty surrounding the perceived threat of inflation has led to a positive mentality towards crypto. According to the report, 19% see inflation as the main threat to investments in 2023, while fears of a global recession rank first with 22%.
Less risk-averse investors also cited interest rates, unemployment and volatility as reasons to stay away.
Speaking to BeInCrypto, Ben Laidler, Global Markets Strategist at eToro, said:
“The fact that two-thirds of retail investors are feeling indifferent or even more positive after the worst year for the markets in a generation may seem strange. But the majority of this cohort thinks in years and decades. For those with longer time horizons, the end of 2022 offered a chance to buy companies at lower valuations, improving the outlook for long-term returns.
Divided by age, held together by crypto
Young investors, perhaps unsurprisingly, are less cautious than older investors. The novelty and uniqueness of Crypto has sparked optimism among the younger generation, despite a long-term downward trend in 2022.
Young investors tend to like new things, while older groups often prefer to invest in more durable assets and avoid investments they don’t fully understand.
The report further found that property of cryptography among women is on the rise. Female Crypto Investors increased 29% in Q3 to 34% in Q4 2022.
Diversify, diversify, diversify
Other retail investors hold the money in checking accounts and savings accounts. Rates and yields on some of these accounts have increased, prompting many people to put their money there as the market moves.
Crypto platforms and companies continue to proclaim that 2023 is a great time to improve while promote crypto as a form of slow and steady long-term diversification. Despite this most recent crypto winter, many investors are optimistic that crypto is an asset class for the future and the next wave of innovation.
Overall, retail investors cited the ability to generate high returns as the primary reason for investing in crypto. Others think crypto is a transformative technology and want to invest in that philosophy.
“It’s an asset that every investor should have in their portfolio. Bitcoin (BTC) is the best performing asset over two years, three years, five years, ten years and over the lifetime of all 14 years, and you need to have some exposure in the portfolio,” Mark Yusko, the renowned executive of Morgan Creek Capital Management asserted.
While these stories can help boost investor confidence, owning a highly volatile asset class comes with challenges. Fears of strict regulations or risks of piracy remain significant barriers to market entry.
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