Retail investors remain optimistic about crypto, study shows

A survey commissioned by eToro and carried out after the onset of the current bear market shows that 40% of retail investors remain confident about the future of Bitcoin.

eToro, a trading platform offering a mix of stocks and digital assets, published the results of a survey carried out between June 7-17 among retail investors in over a dozen countries, including the US, the UK, Germany, France, and Australia. The study included investors in shares, bonds, funds, investment ISAs, or equivalent, as well as cryptoassets.

eToro’s survey came at a turbulent time for crypto markets. It demonstrated the sentiment aftermath of some of the events that shook the crypto community in recent months, including the collapse of Terra, but more recent developments, like the bankruptcy of Voyager, came after the survey closed.

Others still could have had a partial effect. During the time the responses were collected, the price of Bitcoin plunged to a little over $20,000, pushing whales like MicroStrategy and Elon Musk underwater on their Bitcoin investments, and crypto lender Celsius announced the decision to halt all withdrawals.

BTC/USD chart, May 8 - July 8
BTC/USD chart, May 8 - July 8. Source: CoinMarketCap

Over 50% of investors hold on to their crypto

Despite the setbacks suffered by the crypto markets, the results of the survey commissioned by eToro paint an optimistic picture of retail investors’ attitude to crypto. One in three (33%) American investors are invested in cryptoassets, eToro reported, compared to 54% in cash, 54% in domestic equities, and 38% in domestic bonds or fixed income.

According to eToro, 64% of crypto investors held on to their assets, and 28% bought the dip. Just 8% decided to exit their positions, even as fears of a digital asset sell-off balloon into anticipation of a bank run and contagion effect. Four out of 10 respondents believe that Bitcoin would remain the best investment opportunity over the next three months.

Inflation trumps international conflict as source of FUD

The survey reflects the impact of inflation, with 66% of respondents calling it the biggest external risk to investments over the next three months. In May, the annual inflation rate in the US stood at 8.6%, the highest level since 1981.

The next two biggest factors respondents pointed to were the state of the global economy (39%) and international conflict (34%). And yet two out of three retail investors remain optimistic about their bags, even as the Fear & Greed index remains stuck in the extreme fear zone.

Fear & Greed Index at 20 on July 8 and in the Extreme Fear zone throughout June.
Fear & Greed Index was at 20 on July 8 and in the Extreme Fear zone throughout June. Source: https://alternative.me/crypto/fear-and-greed-index/

Asked about their primary goals, respondents quoted long-term security (52%), funding retirement alongside a pension (38%), and financial independence (37%). That last response was particularly popular among younger respondents, with 43% of those aged 18-34 saying it was their main objective.

"Today's investors are facing a perfect storm of setbacks including ongoing market uncertainty, skyrocketing inflation, and an overall increase in cost of living and housing costs,” eToro US Investment Analyst Callie Cox concluded in a press release. She went on to add that “investors across generations are demonstrating a level of maturity and understanding and are not letting emotions dictate important money decisions."