The year 2021 was not an easy year for traditional markets, but it turned out to be a good one for Bitcoin (BTC) which rose about 89% in the year taking with it the entire cryptocurrency market that saw cryptoactives like Axie Infinity (AXS) rise more than 15,000% or the Shiba Inu memecoin (SHIB) which emerged with more than 60,000% appreciation.
In 2022, it brings a series of challenges: the biggest one, perhaps, is the debate on the transience of American inflation and the beginning of the tapering process, the reduction of the Fed’s asset buyback program.
This is what Rodrigo Lima, investment analyst at the stake, a platform that connects people from different countries to the American stock market.
Still according to the expert’s analysis, in 2013, when the US central bank announced that it would start the tapering process, the markets suffered for fear that the withdrawal would cause global economies to stagnate, a phenomenon that became known as the “taper tantrum”.
This fear later proved unfounded, with markets renewing historical highs for the next seven years until the covid-19 pandemic.
“Of course, the logistical problems caused by the pandemic and the ensuing energy crisis should be alleviated and return to relative normality throughout the year, which would pressure inflation down, however it is still not clear that this inflationary phenomenon is explained only for these reasons and not for the release of a pent-up demand by a population that was facing economic lockdowns and closures or by the large injection of liquidity through fiscal and monetary policies, which could make inflation take even longer to cool down”, he points out Lime.
In addition to the cryptocurrency market, according to the analyst, there are also big questions about the labor market. The United States is currently facing a phenomenon that has been called “the great resignation”, coexisting simultaneously with relatively high numbers of unemployment and with large numbers of open vacancies.
“The justifications for trying to explain why this occurs are varied, from unskilled workers who would have been replaced by increasing automation in industries and the service sector and who are therefore unable to adapt to the vacancies, to workers who chose to not returning to the office after spending months working in a home office and realizing that this way they can have more free time for other activities or to dedicate to their families”, says the specialist.
Overall, it is still unclear whether society has won the covid-19 pandemic, particularly with the emergence of the omicron variant. This is perhaps the central problem that should dictate the pace of financial assets in the year 2022, which will definitely not be an easy year to invest.
“This does not mean that investors should necessarily avoid risky assets: 2020 and 2021 were very turbulent and difficult years, however, they offered exceptional returns for the exchanges of practically all countries. Just remember that if there were no uncertainties in the macro scenario, stock prices would certainly be higher”, he advises.
Best performances of 2021
In a year marked by major problems in the world’s logistics chains, including a historic incident such as the Suez Canal bottling, it was no surprise that the best performance of the year came from the logistics sector.
THE BDRY, the index fund of the ETFMG manager that invests in the sector, rises more than 220% in the year, driven by the increase in freight costs around the world.
Right after that, the asset with the best performance was natural gas, which rose almost 100% in the year, thanks to the increase in demand for fossil fuels caused by the energy crisis, while oil rose around 46%, pushing the entire sector up. .
The financial sector, benefited by the rise in interest rates, also had one of the best performances of the year, rising 31.5%.
“The year 2021 was also very positive for cryptocurrencies. Naturally, there are thousands of assets, some that have multiplied hundreds of times and others that have lost almost all their value, however Bitcoin, the main asset of the sector, rises more than 82% in the year. It is not possible to determine whether this is due to fears of inflation or the approval of the first ETF of cryptocurrency futures contracts, but unquestionably this market can no longer be ignored and has been consistently becoming more and more institutionalized”, adds Lima.
As a highlight of poor performance, we can mention the emerging countries, which in general, performed worse than the developed markets and the utilities sector, which rose only 6.6%.
Considered a highly defensive investment thesis, the sector was relatively penalized as investors increasingly demonstrated an appetite for risk thanks to improvements in the global economic and health environment.
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