Can 2021 Stock Market Phenomena Continue Trending Upward Through 2022? – News Couple

Can 2021 Stock Market Phenomena Continue Trending Upward Through 2022?

2021 was an interesting year, with short squeezes, investors watching cryptocurrencies, the rise of SPACs, rising tensions with China, an increase in interest rates, and real estate multipliers.

Contributor to / – MarketBeat

2021 saw amazing returns in the US stock markets, with a third consecutive year of growth and double-digit gains. Markets are up more than 25% on top of their 16% gain that doubled through 2020. The index also hit 70 new closing levels in 2021, chasing 1995 highs, according to the New York Times.

So, what are the signs of the end of the bull run? Prices of household goods, used cars, gasoline and other inflation indicators have skyrocketed. In fact, consumer prices rose 5.7% in November 2021 compared to just one year before, a reminder to those who lived through this period of high inflation in the 1980s.

The payoffs—and the outcomes of unique phenomena in 2021—may look different in 2022. Will the end of the bull run and the perks (goodies) that happened in 2021 continue into 2022? Let’s explore some possibilities.

It can only be past short periods of stress – short-lived

2021 was the year of the short downturn. Short sellers do not enter into stocks that they think the market is overvalued and investors settle on the shares to sell in the hope of repurchasing the shares later at a lower price.

Investors, hungry to take advantage of the riskier side of stocks, took a rally with meme stocks like GameStop and AMC to massive heights in early 2021. The soaring hikes stunned traditional investors and changed the way young investors play in the market.

Meme’s stock enjoyed a brief surge in popularity in November, then fell again. However, Reddit’s other big pools may make it easier for other short squeezes. In other words, skip the GME and watch what’s happening on the other Reddit forums.

Cryptocurrencies may have some successes and mistakes

Cryptocurrencies have mushroomed over the past 10 years, particularly among younger investors. Bitcoin is trading for 50,000 USD and is up 60% in 2021. Ethereum price is up 400% and Dogecoin is up around 3,400%. Take a few experts:

  • Bitcoin: Bitcoin could exceed $100,000 by 2023, and some experts predict it may reach that target by the end of the first quarter of 2022. Others expect bitcoin to drop and wipe out the gains it made last year.
  • Ethereum: After the ETH 2.0 upgrade, the price of Ethereum could jump, closer to $10,000 by the end of 2022.
  • Binance Coin: Extreme volatility could threaten Binance’s coin, but some experts believe it could cross $1,000 by the end of 2022.
  • Dogecoin: Dogecoin has seen its ups and downs in 2021, and by 2022, it could reach $0.30.
  • Solana: Solana has slowly creeped up in the latter half of the year, and experts believe it could exceed $400 in 2022.
  • Shiba Inu: Shiba Inu could reach $0.00007 by the middle of the year and $0.00008 by the end of 2022.
  • Cardano: Cardano has grown by almost 600% and may rise to $2 during the first quarter of 2022.

Plumber attack – or not?

Special purpose acquisition companies, called SPACs, were supposed to usher in a new era of initial public offerings. SPACs, which bypass the traditional (long) path toward public appearances for companies seeking an IPO, and allow companies to bypass the process and merge with an existing company. During the first quarter of 2021, SPACs accounted for 68.5% of all IPOs, but regulators will add accounting guidance through the Securities and Exchange Commission (SEC).

Unfortunately, SPACs have not actually generated significant returns for investors. Moreover, according to some experts, a number of SPACs will become very much in need of deals and some of them will not be beneficial to investors.

high interest rates

The Federal Reserve has already announced that in order to combat inflation, interest rates close to zero are likely to end. The Federal Reserve has indicated that it may raise interest rates three times in 2022, allowing rate hikes to naturally “fix” inflation. The Federal Reserve will also reduce its bond-buying program next year.

Changes in the federal funds rate will affect consumer interest rates, which means that investors, businesses, and consumers change their ways and take some power out of the stock market. (Generally, when the Fed lowers interest rates, it causes the stock market to go up. On the other hand, when the Fed raises interest rates, the stock market usually goes down.)

As interest rates rise (albeit slowly), borrowing becomes more expensive for both consumers and businesses, which can hurt corporate profits and make stocks less attractive to investors. When this occurs, borrowing costs will remain very low by historical standards. Consumer demand may also suffer because people have little money to roam once their mortgage and other loan payments increase. By doing so, inflation returns to the area under control.

The price environment can change the mood of nearly every investor and borrower.

Chinese tensions

2021 was also an amazing year for investors who wanted to buy shares of Chinese companies. As the Chinese government continues to make it more difficult for investors and companies in China, the performance of the Chinese market has seen the Hang Seng Index fall by about 15%, indicating continued turmoil. The MSCI China index ended the year down 37%.

Many experts and analyst assessments have predicted that due to government interference and unpredictability, it is not worth investing in Chinese stocks. On the other hand, risk takers who want to bet on China take the opposite approach: the “China is for sale” mentality.

Real estate madness

The pandemic has spawned one of the most competitive housing markets in US history. Home prices did not come close to the housing market expectations in 2021. In fact, 2021 saw peak sales prices in certain parts of the country. However, experts have predicted that the year 2022 will return to the seller’s market, causing property investors to see the market turn in their favour.

Stocks in 2022: Belt Forward

2021 was an interesting year for investors. Delta and Omicron didn’t hold back the stock market’s rally — they seemed to recover faster and faster after each new virus strain was announced.

No matter where and how you prefer to invest in 2022, it probably won’t look what it did in 2021, so get ready. It’s a new year with new changes in full swing.

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