Equity markets and cryptocurrencies may continue to decline for the next 6 months, due to investors' lower risk appetite. According to the American Association of Individual Investors in the United States, bearish sentiment for the remainder of 2022 and early 2023 is the worst since March 2009.
Following the latest poll released on September 28, it emerged that 60,9% of investors have bearish sentiment for the next 6 months. Therefore, the fear of further market declines increased by 14,9 percentage points from the previous report.
In line with this, they saw a decrease in bullish sentiment for the next six months from 26,1% to 17,7% and also in neutral sentiment from 27,9% to 17,7%. With this data, they noted that bullish sentiment is among the 20 lowest in the history of the survey, conducted since 1987.
Continued volatility in major equity indices, coupled with inflation, corporate earnings, monetary policy and growing rumors of the possibility of a recession, are likely to weigh on individual investors' short-term expectations for the equity market. Sentiment is also influenced by politics and Russia's invasion of Ukraine. - American Association of Individual Investors in the United States.
Investors are turning to the dollar as a safe haven from risk
Rounding out the worst bearish sentiment in 13 years, Bank of America analysts reported that investors are flocking to the dollar to avoid risky assets. This has pushed the US currency to 20-year highs, as well as equity markets and cryptocurrencies to the downside.
As long as investors' risk appetite continues to decline, stocks and cryptocurrencies may remain in demand. In this regard, the probability that the projections reported by crypto-currency that markets, including bitcoin (quotation BTC), have yet to hit the lows of the 2022 bearish cycle.
