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Retail participation in crypto falters in Q122, long positions drop to lowest levels since 2020
LIMASSOL, CYPRUS, 12 May 2022 – According to a report published by global trading platform Capital.com, cryptocurrencies saw a steady decrease in retail participation in the first quarter of 2022. Traders of digital assets on Capital.com dropped 16% in February and a further 10% in March.
The data showed that the number of global traders (excluding the UK) in digital assets declined 3% last quarter from Q4 2021, while the number of cryptocurrency contracts for difference (CFD) transactions decreased by almost 7%. Capital.com does not offer cryptocurrency CFDs to clients in the UK.
Perhaps the most stark metric over the same period showed that the total number of long positions in crypto dropped to 71% globally, its lowest level since mid-2020. In Q4 2021, traders on the platform were 78% long crypto. At its most bullish in Q2 2021, 81% were long. This may suggest that HODLing—the popular buy-and-hold strategy adopted by many crypto investors—is losing appeal and crypto traders are turning more bearish.
Capital.com Chief Market Analyst, David Jones comments:
“Crypto traders are often driven by momentum more than any other group. Even amid short-term volatility, the crypto faithful are likely to hold or sell their positions rather than short-sell. Crypto investors tend to be herd creatures and many do not sell short due to their personal beliefs so this shift towards more short-selling is surprising.”
In Q1, traders were most bullish on vechain, dogecoin and shiba, with long-to-short position balance in March of 87%, 86% and 85% respectively. They were least upbeat on bitcoin, with the position ratio at 64% in favour of longs. Ethereum was at 67% and litecoin at 75%.
The insights were released in Capital.com’s proprietary report — Pulse — which captures global trading patterns across 6,000 instruments. The Q1 2022 Pulse report tracked the retail trading behaviour of platform users between 1 Jan 2021 to 31 March 2022. Capital.com has over 4 million platform users across the world.
For additional transaction and volume data, you can view the complete Pulse report here .
NOTE: Capital.com does not offer cryptocurrency trading to retail clients through its UK group entity, Capital Com (UK) Limited.