Trading platform and market analysis site, Capital.com, has released its quarterly report for the first quarter of 2022. The report provides an in-depth survey of quarterly trading trends among retail investors. More than 5,000 products can be traded on Capital.com, including stocks and shares, exchange-traded funds (ETFs), currencies and commodities.
Supply chain shocks, inflationary pressures and bubble fears combined early in the year to produce a flammable atmosphere, despite the conclusion of the Covid-19 pandemic. The Russian invasion of Ukraine unleashed the firestorm. Retail traders reacted similarly to institutional investors, rushing to conventional safe havens in the wake of the financial crisis.
Cryptocurrencies are declining
The popularity of cryptocurrencies (which are not available to UK retail customers) fell, according to the survey, during the first quarter of 2022. Trading volumes for other assets, on the other hand, increased by 33% from the previous quarter to reach a new high, despite the high risk environment. In contrast, the number of digital asset traders decreased by 3% in the first quarter of 2022, while trading volume decreased by around 7%.
Despite tensions between Russia and Ukraine, commodity trading soared as the cryptocurrency market crashed. Commodity investment rose 29% in March, following increases of 21% in February and 6% in January. On the other hand, investor engagement in cryptocurrencies steadily declined throughout the quarter, after peaking in January. The number of people trading digital assets on Capital.com fell 16% in February and 10% in March.
A sentiment indicator based on the relative number of long and short positions gave the clearest indication of the general mood of the market. According to this indicator, global crypto long positions fell to 71% of total positions in the third quarter. It was the lowest level at least since mid-2020.
Vechain, Dogecoin, and Shiba Inu were the most bullish among major crypto players, with long-to-short position balances of 87%, 86%, and 85%, respectively. They were the most bullish on Bitcoin, with a position ratio of 64% in favor of long positions. Ethereum was at 67% while Litecoin was at 75% during this time. There has been little movement in the crypto market so far in the second quarter. As long as Russia’s war in Ukraine rages on, many investors may avoid risky investments in favor of “safe” investments. Nonetheless, market dynamics may change this quarter as inflation fears appear to ease.
