S&P 500 (SPY) Tries To Gain More Ground Despite Powell’s Comments

Key Insights

  • Hawkish commentary from Fed Chair Powell put some pressure on leading tech stocks. 
  • Healthcare and financial stocks enjoy strong support today. 
  • S&P 500 needs to settle above 4015 to continue its rebound.

S&P 500 Tries To Continue Its Rebound

S&P 500 is swinging between gains and losses today as leading tech stocks have once again found themselves under pressure. Apple, Alphabet, Amazon are down by about 1%.

Today, traders focused on the hawkish comments from Fed Chair Jerome Powell, who highlighted the importance of Fed’s fight against inflation. Treasury yields moved higher, which was bearish for growth stocks and put some pressure on S&P 500.

At the same time, it should be noted that demand for stocks is visible in the healthcare and financial segments. For example, big banks like JP Morgan, Citigroup, Morgan Stanley are up by about 2% today.

S&P 500

S&P 500 failed to settle above the 4000 level and pulled back. Currently, S&P 500 has settled between the support at 3950 and the resistance at 3980. In case S&P 500 declines below the 3950 level, it will gain additional downside momentum and move towards the next support level at 3915.

On the upside, S&P 500 must settle above 4015 to have a chance to gain sustainable upside momentum. A move above 4015 will open the way to the test of the next resistance level at the 20 EMA at 4035.

Snap Rallies As Memo Highlights Growth Ambitions

Snap is up by more than 7% today as traders react to the internal memo that was sent by the company’s CEO Evan Spiegel. According to the memo, the company plans to grow the user base to 450 million by the end of the next year.

Gamestop has also enjoyed some support today and made an attempt to settle above the $26 level after the company revealed its new partership with the crypto exchange FTX. Gamestop stock has been under serious pressure in recent weeks, and it remains to be seen whether the new crypto partnership will boost interest in the meme stock.

From a big picture point of view, the market needs additional catalysts to continue its rebound. Most likely, trading will remain highly volatile ahead of the Fed decision, which will be released on September 21. While traders look ready to buy stocks after the major pullback, the hawkish Fed may limit their appetite for risk.

For a look at all of today’s economic events, check out our economic calendar.

Are Cryptocurrency Payments the Future of Travel and Retail?

Key Insights:

  • Cryptocurrencies have become increasingly popular for investment and transactions over the last two years.
  • Owing to the growing consumer interest in crypto, online merchants and retailers have started accepting payments in bitcoin and other cryptocurrencies.
  • Cryptocurrencies rose to fame as a payment method in the retail and tourism sector. Still, will the bearish blues hamper the future?

Over the last couple of years, the cryptocurrency sector has gone from being a speculative asset class to achieving massive mainstream adoption. Cryptocurrencies such as bitcoin (BTC), ether (ETH), Dogecoin (DOGE), and a few others saw a meteoric rise both in terms of retail and institutional adoption.

Investors’ risk appetite rose when the 2020 bull run took off; since then, cryptocurrency payments have also witnessed a sheer rise in number. As cryptocurrencies rose to fame, in 2021 amid high market euphoria, the top cryptocurrency bitcoin made an all-time high of $69,000.

Consequently, over the last two years, cryptocurrencies have become increasingly popular for investment and transactions. In fact, despite the recent long-drawn bearish market, crypto transactions and investments have become a standard part of the finance landscape.

On 14 January this year, Tesla started accepting Dogecoin as a mode of payment on select merchandise. However, it’s not just big institutions or retail that are inclining towards crypto payments; of late, tourism has also been touched by the crypto wave.

Retail x Cryptocurrencies

Cryptocurrencies have gained traction in the financial world in recent years. A growing number of traditional investors have allowed payments in crypto for consumers and clients.

Bitcoin and a few altcoins are becoming widely accepted as consumers, and online stores realize the potential of digital currencies. A report released by Goldman Sachs in January 2022 predicts that the digital economy is an $8 trillion-dollar opportunity.

It’s no wonder that online merchants and retailers have started accepting payments in bitcoin and other cryptocurrencies owing to the growing consumer interest in the space. This also allows these firms to position themselves as developing brands in the blockchain and Web 3.0 space.

Surprisingly, Microsoft was one of the early adopters of bitcoin in 2014 when it began accepting the cryptocurrency as payment to buy games, apps, and other digital content in the Microsoft Store for platforms like Windows Phone and Xbox.

Interestingly, modern digital payments giant PayPal began accepting bitcoin in September 2014 — three months before Microsoft boarded the crypto train.

Additionally, several retailers like Whole Foods, Home Depot, GameStop, Newegg, Starbucks, and AT&T now accept bitcoin and other forms of cryptocurrency in their retail stores.

Recent data shows that, as of 2022, an estimated global crypto ownership rates at an average of 4.2%, with over 320 million crypto users worldwide. Quite a few global brands, institutions, and retailers have now started to accept or are in plans to shift to crypto payments.

Tourism x Cryptocurrencies

While the retail sector often takes the limelight when talking about crypto payments, retailers aren’t the only ones showing interest in the space; Cryptocurrencies, Web 3.0, and blockchain technology now have use cases across industries, including tourism. Not only has the travel industry embraced digital assets, but the intersection of the two sectors has also given rise to a new genre of operations – crypto tourism.

Crypto tourism includes funded or booked trips using cryptocurrencies or going to crypto-friendly destinations. The phenomenon also includes traveling for crypto and blockchain events, seminars, and conferences which have increased significantly over the last few months after the pandemic subsided.

Interestingly, several airlines, tour operators, and travel aggregators have begun accepting crypto payments. Emirates Airlines had announced that it would soon accept bitcoin as a mode of payment. While Latvian carrier and Air Baltic already accept crypto payments.

Latvian airline airBaltic was the world’s first airline to accept bitcoin payments for its flight tickets in 2014. Now the company also accepts ether and Dogecoin. Moreover, airfare websites like Cheapair.com and Travala.com also accept crypto payments. In addition to that, tours and activity booking sites like GetYourGuide have also started accepting payments in Dogecoin.

In fact, nowadays, crypto geeks are traveling to several crypto-friendly tourist destinations where digital payments are widely accepted. Crypto-friendly destinations include places like the Bahamas, which has its own digital currency called the Sand Dollar.

Is the Future Bright?

Looking at the growth of cryptocurrencies as a payment method over the last five years presents optimism for the future. However, the recent bear market blues have significantly affected the sector, bringing the cryptocurrency market cap down to a low of $887.24 billion at press time from a high of nearly $3 trillion last year.

The bearish sentiment and rising interest rates have made investors skeptical of entering risky asset markets. Nonetheless, looking at the long-term growth, it can be said that cryptocurrencies could play a crucial role in shaping the future of payments.

Ethereum Layer-two Tokens Tank as TVL Drops to 7 Month Low

Key Insights:

  • Layer-two total value locked has dumped 40% in less than two months.
  • L2 network tokens have also suffered significant selloffs as the bear market deepens.
  • The Ethereum Merge will not reduce gas fees, so there will still be demand for L2 networks when markets recover.

Native tokens for many layer-two projects have tanked to long-term lows as the bears eat away at cryptocurrency market capitalization.

Additionally, total value locked (TVL) across layer-two platforms has dropped to a seven-month low as capital and collateral exit the space.

Crypto Venture Advisor at Presight Capital, Patrick Hansen, pointed out that L2 TVL was at its lowest level this year.

Since the beginning of 2022, TVL across L2 networks has dropped 22.5%. However, since its all-time high of $7.4 billion in early April, the figure has fallen 40%, according to L2beat.

L2 Tokens Tanking

Layer-two networks are used to scale Ethereum for faster and cheaper transactions. They employ a range of technologies such as ‘rollups’ to process some data off the primary blockchain enabling transactions to move quickly and for a lower cost in gas.

L2s surged in popularity this year as Ethereum (ETH) demand skyrocketed with new nonfungible token (NFT) mints and other network activities. Users flocked to L2 platforms such as Arbitrum and Optimism to carry out Ethereum-based transfers on layer-two.

However, the crypto exodus that has accelerated through May has resulted in $1.4 billion withdrawn from L2s since the beginning of the month.

Many of the more extensive L2 networks have their own native tokens, and these too have suffered heavy losses. Decentralized derivatives exchange dYdX, which is the second most popular L2 platform according to L2beat, has seen its token value plummet by 55% over the past month. As a result, the DYDX token is currently trading a painful 93% down from its September all-time high

Loopring is another popular L2 exchange that has seen its LRC token plunge by 35% over the past month despite some prominent partnership announcements such as GameStop [GME]. LRC prices are currently down more than 86% from their November all-time high.

Polygon is another popular L2 network, but it has also seen TVL and token prices tank. The platform’s MATIC token has lost 45% over the past 30 days, and it is down 79% from its December all-time high.

The Merge Effect

Some rumors circulating on crypto social media suggest that the upcoming Ethereum Merge could have a negative impact on layer-two networks. The Merge, which has now been slated for August, will usher in proof-of-stake consensus and end proof-of-work Ethereum mining.

It will not significantly reduce transaction fees as that will only happen with scaling upgrades further down the line. Therefore, there will still be a strong demand for L2 networks when Ethereum demand increases again.

With that in mind, there could be a few bargains from the basket of lower-priced layer-two network tokens during this bear market.

GameStop Delves Deeper Into Crypto With Digital Wallet Launch

Key Insights:

  • The new wallet will be self-custodial and linked to the upcoming NFT marketplace. 
  • The layer-2 Loopring network powers GameStop Wallet.
  • Coinbase has also expanded its trading networks on its crypto wallet.

On May 23, the Texas-based video game, consumer electronics, and gaming merchandise retailer unveiled a new crypto wallet. It stated that the service would allow gamers and customers to store, send, receive and use crypto assets and NFTs across decentralized apps (dapps) without leaving their web browsers.

GameStop [GME] stated that its self-custodial Ethereum (ETH) wallet is a Chrome browser extension. This means it operates in the same way that MetaMask does, as an addition to the web browser.

It added that the wallet would also enable transactions with the GameStop NFT marketplace, which is expected to launch in Q3 this year (the firm’s second fiscal quarter).

Layer-2 Speeds and Pricing

Further details were thin on the ground, but the wallet’s official page revealed that it would be running on the Loopring (LRC) network. Loopring is a layer-2 exchange that uses zero-knowledge rollup technology to increase the speed and decrease the cost of Ethereum transactions.

Swapping tokens using layer-1 Ethereum can cost as much as $50 during peak demand on the network. Loopring transactions, on the other hand, are usually less than a dollar.

Additionally, the wallet is self-custodial, which means that users are responsible for their own crypto keys and security. This is different from wallets from centralized exchanges such as Coinbase [COIN] and Binance that control the keys, and, ultimately the assets stored on them.

The crypto wallet space has been heating up recently, with Robinhood [HOOD] announcing its crypto wallet launch last week. The zero-fee token swap platform is also self-custodial and will feature decentralized finance (DeFi) protocol integration.

Coinbase is also eager to keep up with the wallet competition. In an announcement on May 24, the company unveiled an expansion of wallet trading features to incorporate “thousands of tokens.” The firm has expanded its networks from Ethereum and Polygon (MATIC) to include BNB Chain (formerly Binance Smart Chain) and Avalanche (AVAX). It added that there would be more network expansion in the coming months:

“In the months to come, we’ll be making it possible to conduct swaps on an even greater variety of networks. Not only will trading expand, but we’re also planning to add support for network bridging, allowing you to seamlessly move tokens across multiple networks.”

LRC Price Outlook

The native token for Loopring, the platform behind GameStop’s wallet, surged 30% on the news. LRC has retreated a little since and is currently trading at $0.58 after hitting an intraday high of $0.65, according to CoinGecko.

LRC is one of the few tokens that has made a gain over the past week, notching up 25%, while those around it have tanked. However, the token is still down 84% from its November all-time high of $3.75.

Robinhood To Buy London Based Crypto App as Part of Europe Expansion

Key Insights:

  • Robinhood is set to purchase the London-based fintech app, Ziglu.
  • Through Ziglu’s crypto capabilities, Robinhood will expand into UK and Europe.
  • This is Robinhood’s second major announcement after listing Shiba Inu, Solana, and other assets on its exchange.

Robinhood gained prominence during its GameStop debacle but has since managed to make a name for itself in the crypto space with its cryptocurrency exchange Robinhood Crypto.

Thus, the company is now focusing on simply expanding on the same with its decisions to build on the existing momentum.

Robinhood Comes to the UK

As per a report by CNBC, Robinhood yesterday finalized the purchase of Ziglu, a fintech application based in London that provides crypto trading services for Bitcoin and other cryptocurrencies.

This deal will play an essential role in Robinhood’s plans of expanding its presence in the United Kingdoms and Europe, which it has been eyeing for a while now.

Two years ago, Robinhood was gunning for occupying these territories but had to terminate the plans citing business at home as its priority instead of expanding overseas.

This deal will be of massive value for the platform, which has noticed a steady decline in its monthly active users in quarter 4 of 2021, losing over 1.3 million users in 3 months.

Commenting on losing the market share and the potential that the new deal holds, the Chief Executive Officer (CEO) of Robinhood, Vlad Tenev, said,

“Together with the Ziglu team, we’ll work to leverage the best of both companies, exploring new ways to innovate and break down barriers for customers across the UK and Europe.”

Robinhood’s Attempts at Crypto

Ziglu’s purchase is the second most significant step taken by Robinhood this month, as just last week, FXEmpire reported on the exchange’s announcement of adding Shiba Inu, Solana, Compound, and Polygon’s tokens to Robinhood Crypto. 

A few days later, CEO Tenev was reported discussing the possibility of Dogecoin becoming the ‘Currency of the Internet’, saying the coin’s inflation rate is way below that of USD (Dollar) and that by lowering fees and increasing the number of transactions per second, it can achieve that status.

Thus, it seems like Robinhood will not stop until it becomes a major crypto market player worldwide.

Why Robinhood Stock Is Up By 25% Today

Key Insights

  • Robinhood launches new extended hours. 
  • The company says that it is working towards 24/7 investing. 
  • Analyst estimates may move higher as new trading hours should boost revenue.

Robinhood Stock Rallies After The Company Extends Trading By Four Hours

Shares of Robinhood gained strong upside momentum after the company announced that it decided to extend trading by four hours.

Robinhood noted: “By expanding pre-market trading to 7 a.m. from 9 a.m. ET and after-hours trading to 8 p.m. ET, we’re adding an extra four hours for orders to be filled”. Previously, the company offered extended hours trading from 9 a.m. to 9:30 a.m. ET and 4 p.m. to 6 p.m. ET. Robinhood also noted that it was working towards offering 24/7 investing.

The market’s reaction was very strong, and the stock was up by 25%. The recent rally in meme stocks like GameStop and AMC may have also provided some support to Robinhood stock.

What’s Next For Robinhood Stock?

The company’s decision to boost trading hours will increase its revenue, so it’s not surprising to see that traders decided to buy the stock on the news.

Currently, analysts expect that Robinhood will report a loss of $1.26 per share in the current year and a loss of $0.77 per share in the next year, so the company is not expected to become profitable in the near term.

Robinhood stock declined from the $85 level in August 2021 to the $10 level in mid-March 2022, so the company feels the pressure to boost revenue and get closer to profitability.

It remains to be seen whether analyst estimates will materially improve in the upcoming weeks, but Robinhood is clearly making a move in the right direction. At the same time, it should be noted that the stock will likely remain highly volatile in the upcoming trading sessions as traders will try to evaluate whether the strong upside move was justified.

For a look at all of today’s economic events, check out our economic calendar.

GameStop Plans July NFT Marketplace Launch

Key Insights:

  • GameStop joins a growing list to target the NFT marketplace.
  • Game retailer partners with Immutable X, with plans to go live in July.
  • The NFT marketplace is getting busier, with Coinbase also planning to go NFT.

GameStop Corporation (GME) is gaming, consumer electronics, and video game retailer listed on the New York Stock Exchange.

Back in 2021, GameStop Corp. made the headlines, with subreddit r/wallstreetbets users triggering a GME short squeeze. GME’s share price rocketed from sub-$20 levels to just short of $500 before sliding back to sub-$100 levels, as shown in the chart below.

In January, the Wall Street Journal delivered GME a New Year boost, reporting the company’s NFT and crypto plans.

The move into the NFT and crypto space is in a bid to revive its videogame business.

GameStop
The market shows little reaction to news of a July launch date.

GameStop Announces July Move into the NFT Marketplace

On Thursday, GameStop provided investors with a timeline on its NFT marketplace launch during its fourth-quarter earnings call.

On the call, GameStop confirmed its Immutable X (IMX) partnership to launch the GameStop marketplace. GameStop will receive,

“Up to $150m equivalent in IMX tokens upon achievement of certain milestones.”

The company has made hires in blockchain gaming, e-commerce and technology, product refurbishment, and operations with a planned July rollout.

GameStop is not the only shop going into the NFT market, with record-high trading volumes from January and marked interest in NFTs drawing other players into the space.

GameStop Follows Coinbase into a More Crowded Marketplace

This week, U.S-listed crypto giant Coinbase announced plans to launch an NFT marketplace. Coinbase aims to allow users to discover, mint, purchase, and showcase NFTs.

While no launch date is available, Coinbase met with more than a hundred creators to expedite its marketplace launch.

With more than 2.5m joining the Coinbase NFT waitlist, GameStop will need to stick to its target video gaming audience to be successful.

The NFT marketplace has become busier in recent months and will only get more active in the months ahead. LooksRare (LOOKS), a competitor of established NFT marketplace OpenSea, entered the NFT space in January amidst surging trading volumes.

With the NFT space getting busier, competition will likely become fierce with Coinbase, OpenSea, and LooksRare in the mix.

Wall Street Week Ahead: Lennar, FedEx, Dollar General, GameStop and Fed’s Policy in Focus

The Ukraine-Russia crisis continued to dominate market movements, causing extreme volatility in the financial market and pushing the oil prices to a decade high and depressing stocks.

The U.S. Federal Reserve is widely expected to hike by 25 basis points to 0.25%-0.5% on Wednesday. Still, analysts will closely monitor inflation and the economic growth outlook and how the central bank projects future rate increases. The fear of a vicious cycle of low growth and higher inflation could deter the Fed from raising rates faster than expected previously.

Last week, the S&P 500 dropped 2.9%. Stocks in the energy sector were the top performers, up nearly 1.9%. Energy stocks have rallied on concerns about tightening supplies that have driven up oil and gas prices. The rally would likely continue this week.

In addition, investors will focus on December quarter earnings for economically sensitive stocks, which should show better profits than technology stocks amid surging inflation.

Earnings By Day

Earnings Calendar For The Week Of March 14

Monday (March 14)

TICKER COMPANY EPS FORECAST
CVGW Calavo Growers $-0.01
CORR CorEnergy Infrastructure Trust $0.37
MTN Vail Resorts $5.73

 

Tuesday (March 15)

TICKER COMPANY EPS FORECAST
CAL Caleres $0.46
CHMI Cherry Hill Mortgage Investment $0.28
IHS IHS Holding $0.04
KNDI Kandi Technologies Group $-0.07

 

Wednesday (March 16)

IN THE SPOTLIGHT: LENNAR

The home construction and real estate company Lennar is expected to report earnings per share of $2.80 in the fiscal first quarter, which represents year-over-year growth of over 37% from $2.04 per share seen in the same period a year ago.

The Miami, Florida-based company would post year-over-year revenue growth of more than 16% to around $6.2 billion. The company has beaten consensus earnings estimates in most of the quarters in the last two years, at least.

“2020-2021 proved to be strong years for the U.S. housing market despite the COVID-19 pandemic. We believe favourable demographics will support steady residential construction activity this decade, with annual housing starts averaging 1.6 million units. We expect first-time buyers will be a key driver of future housing demand, and Lennar is well-positioned to capture these potential buyers with its increased mix of entry-level homes,” noted Brian Bernard, Sector Director at Morningstar.

Lennar controls an ample land supply, which affords the company the ability to meet future demand while focusing on improving cash flows and maintaining a strong balance sheet. The company has shifted to a lighter land acquisition strategy, which seeks to reduce the amount of capital tied up in land by purchasing smaller land parcels and relying more on land options to acquire land on a just-in-time basis. We think this strategy should help the company realize better returns on invested capital and cash flows over the business cycle.”

A list of other earnings reports mentionable

TICKER COMPANY EPS FORECAST
GES Guess? $1.16
JBL Jabil $1.24
LE Lands’ End $0.33
SMTC Semtech $0.49

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 16

Thursday (March 17)

IN THE SPOTLIGHT: FEDEX, GAMESTOP, DOLLAR GENERAL

FEDEX: The Memphis, Tennessee-based multinational delivery services company FedEx is expected to report its fiscal third-quarter earnings of $4.47 per share, which represents year-over-year growth of over 28% from $3.47 per share seen in the same period a year ago.

The delivery firm would post revenue growth of over 9% to $23.58 billion. It is worth noting that the company has beaten earnings estimates only twice in the last four quarters.

“We are estimating adjusted EPS of $4.76, above the $4.69 consensus. FedEx (FDX) beat on the top and bottom lines last quarter as demand held in while costs remained manageable. We expect most strategic questions to be deferred to the June 28 /29 investor day,” noted Helane Becker, equity analyst at Cowen.

GAMESTOP: The world’s largest multichannel video game retailer GameStop is expected to report its fourth-quarter earnings of $1.06 per share, an improvement from a loss of -$1.39 per share seen in the third quarter. The Grapevine, Texas-based company is forecast to post year-over-year revenue growth of about 4% to around $2.2 billion.

DOLLAR GENERAL: The discount retailer is expected to report earnings per share of $2.59 in the fourth quarter of 2021, which represents a year-over-year decline of over 1.1% from $2.62 per share seen in the same period a year ago.

The Goodlettsville Tennessee-based company is expected to post a net income of $8.69 billion. The company has beaten consensus earnings estimates in most of the quarters in the last two years, at least.

Dollar General (DG) is a best-in-class operator offering a rare combination of 1) consistent, high-quality top-and bottom-line results; 2) visible store growth; and 3) a shareholder-friendly capital allocation policy. The ’22 investment setup is less favourable given decelerating momentum from recent initiatives, a tougher macro backdrop, and ramping expense pressures (particularly on labour). Street estimates look full/fair with less upside potential in our view,” noted Simeon Gutman, equity analyst at Morgan Stanley.

Dollar General’s (DG) valuation (~20x P/E multiple) is in-line with the market and screens relatively fair vs both relative and absolute history. Emerging initiatives (Popshelf, healthcare, produce) are longer-term drivers but likely won’t move the needle in ’22.”

A list of other earnings reports mentionable

TICKER COMPANY EPS FORECAST
ACN Accenture $2.36
DG Dollar General $2.59

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 17

Friday (March 18)

No major earnings are scheduled for release.

Ethereum NFT Platform Immutable Closes $200M Funding

Key Insights

  • Australian NFT startup Immutable raised $200 million in a Series C funding round.
  • The funds will be used for expansion, new hires, and acquisition.
  • Immutable is the developer behind the Ethereum Layer 2 platform Immutable X.

While Bitcoin, Ethereum, and the larger cryptocurrency market moved in a rangebound trajectory owing to the war-induced conundrum in the financial markets, the NFT space continued to boom.

Carrying the growth graph forward, Australian NFT startup Immutable announced on March 7 that it had raised $200 million in a Series C funding round led by Temasek.

Immutable Valuation Jumps to $2.5B

Immutable announced that it had raised $200 million in a Series C funding round led by Singapore’s state-owned investment company Temasek. With the recent financing, the company’s valuation jumped to $2.5 billion.

According to a press release shared by the organization, the funds will be used for global expansion, including boosting Immutable Gaming Studio and merger-and-acquisitions activity.

While the funding round was led by Temasek, several other major crypto venture firms, including ParaFi Capital, Alameda Research, and Arrington Capital, also participated in it. The press release further noted:

“This capital will be used to fuel Immutable’s plans for global expansion, accelerate the company’s growth by investing in the Immutable X platform, and scale the Immutable Gaming Studio, including its flagship games Gods Unchained (one of the largest blockchain games by players) and Guild of Guardians.”

In September 2021, the company had raised money at a valuation of $410 million in its previous funding round. The recent rise in valuation puts Immutable’s value at an approximately six-fold increase since September.

Tapping Into the NFT Space

The Sydney-based firm is behind NFT games like ‘Gods Unchained’ and ‘Guild of Guardians.’ Immutable’s flagship product, however, is Immutable X, an Ethereum-based Layer 2 scaling solution for NFTs.

In February, the firm had announced a partnership with GameStop to launch the company’s NFT marketplace. GameStop and Immutable established a $100 million fund dedicated to supporting creators of NFT content from gaming studios, Web3, and metaverse gaming.

Talking about expansion into NFTs and the Metaverse space, Immutable’s co-founder and president, Robbie Ferguson, said on Twitter:

“NFTs are eating the world. Gaming will be the trojan horse that means your family can trade and own digital property without them even knowing.”

Furthermore, on February 16, Habbo’s owner and operator company Silake announced that they would be boosting the NFT experience for its over 500,000 users using Immutable X.

Other significant organizations building on Immutable’s Layer 2 scaling platform include TikTok, OpenSea, and Illuvium. Seemingly, Immutable’s collaborations and partnerships have been leading the way for the firm’s expansion.

FTX Crypto Exchange Launching Gaming Unit to Encourage NFT Adoption

In an effort to branch out of crypto assets, the FTX exchange has announced that it will be launching a gaming unit that will operate as a “crypto-as-a-service” platform.

The new division will be geared towards game publishers and developers encouraging them to embrace digital assets and nonfungible tokens (NFTs). It will be operated through the American branch of the exchange, FTX.US, according to a Feb. 21 Bloomberg report. A spokesperson for the firm told the outlet:

“We are launching FTX Gaming because we see games as an exciting use case for crypto. There are 2 billion+ gamers in the world who have played with and collected digital items, and can now also own them.”

Into The Gaming World

The global gaming industry is expected to top a value of $300 billion in 2022, and it ties in with digital items and currencies which are collected and used or traded in-game. FTX (FTT) aims to harness this symbiosis by building a platform that allows game developers to launch their own tokens.

In November, the firm stated that it would join partners to invest $100 million to integrate its Solana blockchain into video games. However, the network once dubbed an “Ethereum killer” has been plagued with performance and outage issues over the past few months.

Developers and crypto companies can see this marriage as being highly profitable but gamers themselves have remained highly skeptical of crypto assets, especially NFTs. However, play-to-earn (P2E) platforms have increased in popularity, especially in countries such as the Philippines where gamers have a way to earn tokens by participating.

Speaking to The Verge, president of FTX US Brett Harrison said that blockchain technology builds upon gaming features that already exist, such as avatars, items, skins, and rewards, and makes it possible for gamers to trade, own, and invest in them.

“I think the backlash is primarily out of concern that the focus on cryptocurrency will divert the efforts of game studios away from making the best game possible for the players,”

Gamer Backlash

Detractors have pointed out that there are too many scams in the crypto space and proof-of-work mining has a heavy impact on the environment. A counter-argument to this would be that so do millions of gaming servers and power-hungry graphics cards.

The shift already appears to be underway, however. Late last year, gaming giant Ubisoft Entertainment (UBI) announced a platform that would allow players of one of its popular titles to buy and sell in-game NFTs, though hardcore gamers were still against the concept.

Earlier this month, GameStop (GME) announced plans to launch its own marketplace for NFTs and a $100 million fund for game developers who use it.

YOLO: The New Investment Strategy That Rakes in Millions to Young Investors, But Remains Risky

The adherents of the YOLO movement are a young bunch of diehard optimists believing in a single stock and its future performance, pitching in all the chips they have, while hoping for the best.

The meme phenomenon has spread far and wide beyond the obscure dark and not-so-dark humor online boards into the financial market, with crypto meme coin tickers taking up the precious characters of Tweets posted by some prominent investors like Elon Musk. But it has recently overspilled into the conventional financial industry of Wall Street, taking on the form of the YOLO movement.

This bizarre phenomenon has seen stocks being pumped beyond even the most optimistic prices by online message boards in an almost coordinated tidal wave that swept across the booming market through 2020 and 2021.

Birth of a legend

With over 80% of investors in YOLO stocks being born in the late 1990s, their overconfidence in continued market growth is staggering, allowing them to take on leverage in the form of credits and debts to start investing in selected stocks. And though there is no actual asset class that could be termed YOLO, it pertains to companies that have posted immense gains and generated headlines during the pandemic lockdown period.

Among the most notable examples over 2020 to 2021 are AMC Entertainment (AMC), which skyrocketed by over 2,000% in just under a year, and GameStop (GME)– up 5,232% in the past year. Others in the league are Bed, Bath & Beyond (BBY) with 328% gains, Blackberry (BB) – 113% year-to-date, and others.

It all started in early 2021 with GameStop Corp. (GME), which saw its stocks boosted by a group of Reddit users who started investing in it and attracted others to do so. The price soared tenfold from $4 in 2020 to $350 in early 2021. And though stocks eventually took a nosedive to $40 by February of 2021, the GME saga allowed some investors to make millions in short positions on its traction in under a few weeks.

Needless to say, a legend was born that took on a life of its own and spread like wildfire, feeding on the hype frenzy and the trusting nature of YOLO stock investors.

In fact, stocks with considerable short interest attract droves of buyers. In turn, the short-sellers have to start covering their positions by buying back the shares that they had previously borrowed and sold. Such a rush results in massive artificial demand fueled by message board posts, pushing prices up.

The risks

Youth is oftentimes described as a disease of inexperience. And rightly so, considering the young age of most investors in YOLO stocks. Such inexperience in true market dynamics is the reason why the strategy is extremely risky, as most investors in one-off stocks hyped by message boards have never seen a bearish market, nor have they any clue of what a market crash looks like.

Considering that, and the fact that many of them are investing borrowed funds, their life savings, or even their mom-&-pops’ money, is painting out an eerie picture of the potential consequences of what a sudden market crash or shakeup could result in.

Past the fun and excitement of YOLO investing lies the harsh reality that only a meager portion of quick in-&-out investors rake in millions on the strategy. The risks far outweigh the benefits, as the odds of losing all are roughly the same as making some.

Intuition and message board posts from users pursuing their own interests are far from ideal investment consultants. When taking on the murky path of YOLO investing, one must never forget about portfolio diversification — a pillar of investment management that most young investors simply disregard.

Apart from offering some interaction with a community of concurring investors that may vanish as quickly as the investment in hyped stocks, YOLO is not a sound long-term investment strategy. The mere fact that YOLO stocks were chronic underperformers is a clear indicator that their price spikes are doomed to be grounded the moment the hype wears out.

However, if one is eager to try out YOLO investing, the first step would be to select the proper stocks. Reddit channels like Wallstreetbets are the go-to venue, where heated discussions and real-time updates can shed light on potential unicorns and gems. Doing some proper research is also vital, making sure that selected companies have high short interest and available call options, so essential for leveraged investments and bets on positive price traction.

Invest cautiously

YOLO is a fad, a fleeting phenomenon that is certainly not for the average or inexperienced investor. Such stocks are best suited for professional traders with leverage to spend, while novice or entry-capital market players should opt for lower-risk instruments like growth stocks, value stocks, dividend stocks, and large-cap stocks of major companies.

Considering that a great many YOLO investors entered the market out of boredom during the first lockdowns, or after being chatted into it by friends and message board users, the risks they bear with every cent injected are immense. YOLO is more like gambling with borrowed money, where the chances are teetering on the edge of the blade either way.

Far worse is the fact that YOLO stocks serve the experienced investor and the lucky few, attracting droves of fresh liquidity providers by splaying a handful of success stories as the norm of future stock performance for all involved. With less experience and even less money than previous generations, YOLO investors are playing naked with fire.

StockTwits Partners FTX to Launch Crypto Services

Finance-focused social media platform, StockTwits has taken a step further into the industry with plans to launch crypto and derivatives trading services. 

FTX.US Partnership

The platform is partnering with FTX.US to enable trading. With this new service, StockTwits users will trade crypto and derivatives directly from the app.

The platform, which was originally a social media app for investors, has been in existence since 2008. It claimed to have popularized cashtags, i.e. the combination of dollar signs with a stock ticker symbol $GOOGL, $TSLA, $COIN, etc.

It shot into the limelight in 2021 during the short squeeze frenzy involving AMC and GameStop stocks. Along with subreddit r/Wallstreetbets, StockTwits helped popularize the meme stock movement last year. The retail investors’ short squeeze led to hedge funds losing billions on short positions.

At that time, StockTwits was one of the discussion platforms for investors. The New York-based company has the tools and data that encourage investors and traders to interact and discuss. 

But in recent times, crypto discussions have become prominent. Clearly, the team behind the platform has now seen it can serve more than one purpose. 

With 6 million registered users and 5 million active monthly users, the new feature means that millions of retail investors will now have access to crypto. 

Eyes Crypto and Derivatives Trading

It also means that StockTwits joins the list of companies involved in the short squeeze saga who have now integrated crypto. Robinhood, GameStop, and AMC have already integrated crypto into their services.

According to the CEO, crypto trading will allow it to better serve users. With “community and data” already in place, “the addition of execution” completes the production expansion.

The partnership with FTX means that StockTwits means that the platform will become a sort of Robinhood for retail investors. 

But its social media features and data analytics means it can distinguish itself from other retail trading platforms. While it’s starting with crypto, it intends to expand into derivatives trading later.

GameStop Partners With Immutable X To Establish a $100M NFT Fund

As the trend goes, Web3, NFTs, and Metaverse are the current focus of attention for organizations, companies, and investors alike.

From simply being a part of the space to literally furthering it into the future, crypto is observing major developmental bullishness from the crowd.

GameStop x Immutable X

In a press release today, GameStop highlighted its partnership with Immutable X. With this partnership, GameStop plans on drawing developers towards its upcoming NFT marketplace.

The announcement reads:

“The partnership establishes an up to $100 million fund in Immutable X’s IMX tokens, which the parties intend to use for grants to creators of non-fungible token (“NFT”) content and technology. (sic)”

With this partnership, Immutable X, which is the first layer 2 for NFTs on Ethereum, will also act as a layer 2 partner and platform for GameStop.

Furthermore, as per the agreement, Immutable X will also be providing GameStop with about $150 million in IMX tokens (Immutable X’s native cryptocurrency). On the same, the release reads:

“The number of IMX tokens scheduled to be granted to GameStop was based on the 7-day trailing average of the IMX USD closing price preceding the date the partnership agreement was executed by the parties.”

This will be a game-changer for Gamestop as operating as a Layer 2 on Ethereum has enabled Immutable X to be used for quick and cheap transactions.

Gamestop aims at banking on this exactly as the upcoming marketplace from Gamestop is aimed at including ‘billions’ of low-cost in-game items that can also be traded.

Other Companies in the Web3

While GameStop is still relevant to Web3 owing to the fact that its business focuses on games, many other companies are also finding ways either to be a part of it or simply to invest in it.

Recently Verizon partnered with Entain Inc to produce Ennovate which will basically be $133 million into the metaverse. 

Additionally, Cryptocurrency exchange Gemini’s Galactic Market too became a FINRA member recently although its operations will be limited to that of operating as a broker-dealer registered with the SEC.

As more and more companies join, this place will blow up just as quickly.

Elon Musk and Dogecoin Earns Litecoin Creator Praise

Charlie Lee, the creator of Litecoin, one of the largest crypto assets by market cap, has hailed the popular meme coin, Dogecoin, for its role in driving mainstream adoption of the crypto industry. 

Lee went on to describe the meme token as being “great” and “pretty fun.”

Elon Musk and Dogecoin Helped Push Crypto Mainstream 

In a recent interview, the Litecoin creator conceded that the richest man in the world, Elon Musk, also played a role in making cryptocurrencies “a mainstream topic.”

His praise of Elon Musk and Dogecoin is unsurprising considering the role both have played in bridging the gap between the crypto industry and the mainstream public.

The SpaceX CEO has severally spoken about digital assets like Bitcoin, and others on his Twitter page. Apart from that, his electric car maker company, Tesla, currently accepts Dogecoin as a payment option for its products. 

This is coming after the same company invested heavily in Bitcoin last year and also briefly accepted the coin as a means of payment for its vehicles.

Aside from that, most of the spikes seen in the price of Dogecoin in 2021 were largely thanks to the tweets of the billionaire. Just recently, he urged McDonald’s to accept the meme coin as a payment option for its foods.

Notably, Dogecoin was launched in 2013 from a defunct Litecoin fork called “Lucky Coin.” Its popularity however soared last year thanks to Elon Musk and the GameStop stock saga. 

Litecoin Privacy-focused Upgrade is Finally Live

Litecoin is undoubtedly one of the oldest altcoins in the market as it is a Bitcoin fork for the best part of the last decade.

Recently, the network implemented its long-awaited privacy upgrade, tagged Mimblewimble. Like Monero, this upgrade would allow users to be able to keep their financial transactions away from the prying eyes of the public.

According to Lee, this upgrade will enable users to spend without the need to bother about privacy issues. With this upgrade, only the parties involved in a transaction are able to know the amount that was transacted.

Interestingly, Charlie Lee does not hold any units of Litecoin. In 2018, he sold all of his holdings right before the market crashed. This led to accusations of inside trading. 

However, Lee has denied any wrongdoing saying his focus is on how the project’s technologies work and not how these upgrades affect the asset’s price performance.

As of press time, Litecoin is trading for $112.

Is SHIBerse a Real Catalyst for Shiba Inu?

Shiba Inu gained some upside momentum after it announced that the name of its Metaverse (SHIBerse) would be revealed in the next few days.

Shiba Inu Rebounds Together With the Whole Crypto Market

Metaverse became a very hot topic after Meta Platforms (which was previously known as Facebook) revealed its plans to bet heavily on digital worlds.

Shiba Inu developers have joined the trend and are ready to announce the name for the upcoming Metaverse:

Interestingly, there was no special reaction to the announcement. While Shiba Inu has bounced back from recent lows, the move was driven by the broad rebound in crypto markets. Bitcoin moved from the $33,000 level to the $38,000 level, and other cryptocurrencies followed.

From a big picture point of view, the leading meme coins, Shiba Inu and Dogecoin, remain in a downside trend. I’d note that meme stocks like GameStop or AMC have also lost a lot of ground in recent months, suggesting that traders may be losing interest in the “meme” topic.

This is a major threat to meme coins as their success is dependent on the constant growth of their popularity. In case the market switches to other topics, Shiba Inu will move lower.

A Move Above $0.00002250 Will Push Shiba Inu Towards $0.00002350

shiba inu january 26 2022

Shiba Inu is currently testing the resistance level at $0.00002250. In case this test is successful, Shiba Inu will move towards the next resistance which is located at $0.00002350. A move above this level will open the way to the test of the resistance at $0.00002550. If Shiba Inu gets above $0.00002550, it will head towards the next resistance level at the 20 EMA at $0.00002620.

On the support side, the nearest significant support level for Shiba Inu is located at $0.000020. In case Shiba Inu declines below this level, it will head towards the next support at $0.00001860. A move below this level will push Shiba Inu towards the support near recent lows at $0.000017.

Loopring (LRC) Weakness Persists As It Moves Below $1.00

Loopring has recently managed to settle below the psychologically important $1.00 level and is testing the support at $0.95 amid crypto market sell-off.

Three Catalysts Behind the Recent Weakness

There are three main catalysts that triggered the recent downside move, which pushed LRC from $1.50 to $0.95.

From a technical point of view, LRC gained strong downside momentum after it managed to settle below the support level at 1.37.

Rumors about a potential GameStop partnership have not materialized. In addition, GameStop stock fell out of favor and declined from the $250 level in November 2021 (when the rumors have first emerged) to the $100 level as the popularity of meme stock declined.

The current crypto market sell-off, which was triggered by a global move out of riskier assets, served as an additional negative catalyst that pushed LRC below the $1.00 level.

LRC Is Oversold

lrc daily january 21 2022

LRC is currently testing the support level at $0.95. RSI is in the oversold territory and is moving closer to the extremely oversold territory, but there is some room to gain additional downside momentum in case the current crypto market sell-off continues.

In case LRC declines below $0.95, it will head towards the next support at $0.80. A move below this level will push LRC towards the support at $0.75. If LRC manages to settle below the support at $0.75, it will head towards the next support level at $0.65.

On the upside, the nearest resistance level for LRC is located at $1.07. A successful test of this level will push LRC towards the resistance at $1.17. In case LRC manages to settle above this level, it will head towards the next resistance level at $1.37.

lrc h1 january 21 2022

Taking a look at H1 chart, we can see that RSI has recently moved away from the extremely oversold territory, but LRC may still need to go through a period of consolidation to have a chance to get below the support level at $0.95.

2022 Market Outlook

In this short and comprehensive analysis of the current market situation, you will find answers to the following questions:

  • What can we expect from the global economy this year?
  • How will the market react amid tighter monetary policies?
  • When will the Fed raise interest rates?

Don’s miss our latest market update: Watch now!

 

For a look at all of today’s economic events, check out our economic calendar.

Loopring Shows Bearish Sign Even After Rumors Of GameStop Partnership Spur

Loopring (LRC) has been seen under the radar, despite interest in NFTs. The liquidity token tumbled more than 20% in the recent past.

At the time of writing, LRC crypto currently ranks 58th position based on its market cap of $2.08 billion.

There was a lot of hype surrounding Loopring after GameStop announced that it would be launching a marketplace for NFTs, later this year. This was specifically due to GameStop’s agreements with two undisclosed crypto companies. According to crypto speculators’ predictions, one of these companies is Loopring.

What Is Loopring?

Loopring, founded by a Chinese programmer Daniel Wang, is a blockchain-based project that works on top of the Ethereum network. The project aims to incentivize a global network of users to operate a platform, enabling the creation of different types of digital asset exchanges.

Additionally, Loopring uses what’s called Layer 2, which carries out transactions off the blockchain to avoid congestion and cost. With this tech, the network doesn’t need to confirm transactions, as the Layer-2 solution will be responsible.

Another key feature includes its high speed and low costs through the use of a newer type of cryptography called zero-knowledge rollups, or zkRollups. Loopring is powered by its native utility token called LRC.

Loopring’s Bearish Run

While the other traditional cryptocurrencies struggled hard to bear above the support levels, Loopring quickly recovered from the losses to its initial levels, in late 2021. Nevertheless, it fell again under the bearish trap.

Loopring 1Week Chart

In general, the Loopring price is bearish in both the short and long-term, yet notable consolidation is expected in short-term.

However, Loopring announced on Twitter that they are “constantly optimizing.” The post read that “Loopring L2 can now Mint an NFT for just $2.50,” which is 100x cheaper than minting on Ethereum L1. 

Despite the mention that the optimization has led to cheaper costs to mint an NFT, and with an advantage of having “Ethereum-level security,” it has failed to serve as a bullish catalyst for Loopring.

Like Loopring, NFT tokens such as Axie Infinity’s AXS token, lost more than 20% of its value in the past week, despite interests coming from top companies.

SAND and MANA join the pack with their losses in recent times, according to Coingecko data.

Crypto Inspiration Boosts GameStop Stock by Over 20%

The shares of video game retailer GameStop saw a 27% rise on extended trading yesterday. This came after news that the company is launching a division to develop a Non-fungible token (NFT) Marketplace and establish cryptocurrency partnerships.

GameStop to Launch an NFT Marketplace 

Although the company refused to comment, a source close to the matter confirms this saying it is part of the massive restructuring currently ongoing at the company. This is in a bid to turn GameStop to eCommerce after years as a brick-and-mortar business.

Apparently, an NFT marketplace is an important part of this plan. According to Wall Street Journal, which first reported the news, the company is already working with some game developers and publishers who’ll list their NFTs on the marketplace.

The company got a lot of attention during the meme stock rally as the price of GME went through the roof last year. But it has since dropped to more conservative levels. 

Now, an NFT marketplace appears to be the perfect catalyst the company needs for its shares to rebound. GameStop launched an NFT website last year for creators to join the platform and also announced that it would be accepting popular meme coins, Dogecoin and Shiba Inu.

With the company already hiring over 20 people to work on the project, the marketplace might be a reality soon. Per WSJ, the marketplace will be a virtual space for people to trade NFTs of virtual video games collectibles.

GameStop’s interest in NFT isn’t surprising, especially with the digital asset’s mainstream attention in recent months. You’ll recall that we reported the acquisition of an NFT by popular football star Mario Gotze. We also reported that a leading sporting event, Australian Open, is also incorporating NFTs into its tournament.

Also, two of the leading electronics makers in the world, Samsung and LG electronics have announced that they would be adding NFT features to their new smart TVs.

NFT-related Tokens are in red Despite Public Interest

According to data from Coingecko, the top 5 NFT tokens by market cap have lost between 2% to 25% of their values in the last seven days.

In fact, Axie Infinity’s AXS token, for example, is one of the biggest losers as it lost over 20% of its value within the last 7 days despite the growing interest by top companies like Adidas and others. Other top losers include GALA and SAND with losses in double digits too.

However, it should be noted that the entire crypto market is currently bearish.

Projects like Decentraland, Enjin Coin, and others went on a bull run that culminated in their native tokens rising to new heights last year.

2021: A Year Defined by Soaring Inflation, Covid Variants & Market Resilience

After an extremely chaotic 2020, the world pinned hopes on stability and normality returning this year.

Indeed, 2021 kicked off on a positive note as the mass vaccinations against Covid-19 and confirmation of Joe Biden’s victory in the presidential election boosted investor confidence.

Renewed stimulus hopes from Biden’s $1.9 trillion economic rescue plan fuelled the risk-on mood, propelling US stocks to record highs during the first month of 2021. Console retailer GameStop also hijacked the headlines by surging over 1600% in January as a group of investors on Reddit fuelled a short squeeze in the company’s shares.

In February, a sense of caution enveloped global markets as investors mulled over the possibility of rising inflation becoming a major theme. Signs of inflation were already spotted across the globe amid supply-chain disruptions, while prices pressures were expected to return amid an economic boom powered by vaccines and pent-up consumer demand. Taking a look at commodities, gold tumbled to an 8-month low under $1720 thanks to rising yields, dollar strength, and growing global risk appetite.

Things started getting sticky in March as coronavirus variants appeared across the globe. In the United Kingdom, the B.1.1.7 strain was initially considered more lethal than earlier variants. Different variants of the novel coronavirus were also reported in Brazil and even India which saw a spike in cases despite vaccine rollouts. On the currency front, the dollar appreciated against almost every single G10 currency as investors speculated that the massive fiscal stimulus and aggressive vaccinations would help the US economy recover.

Q2 kicked off on a positive note despite global economic uncertainty caused by the ongoing pandemic. Equity bulls remained in the driving seat amid robust Q1 earnings, the Fed’s pledge to keep rates lower for longer, and China’s eye-popping 18.3% growth in the first quarter.

In other news, Coinbase made its debut on Nasdaq on April 14th which was seen as a watershed moment for the cryptocurrency industry.

Everyone was talking about copper in May as the commodity surged to a record high of $4.9. The rally was triggered by the reopening of major economies and the robust demand for minerals needed for the green energy agenda. Given how copper is used in everything from electric vehicles to home appliances like washing machines, the outlook was heavily bullish – especially amid the bigger global focus on green energy. The commodities boom, fuelled by rising global demand and supply shortages fuelled fears around inflation across the globe.

In the United Kingdom, the Delta variant of Covid-19 clouded economic recovery hopes in June. As the third wave of Covid-19 cast doubt on more lockdown easing before July, the British Pound tumbled against every single G10 currency, sinking as low as 1.3790 against the dollar.

It was not only the UK affected by the Delta variant, it swept across Europe and started gaining ground in the United States. Hotspots were also found in Asia and Africa.

A sense of unease gripped markets in July as Covid-19 cases across the globe surged. The International Monetary Fund (IMF) warned that unequal access to Covid vaccines risked derailing the global recovery. Global stocks displayed resilience despite the Delta variant fuelling the surge in coronavirus cases worldwide. Infact, the S&P500 concluded the month of July almost 2% higher despite the growing uncertainty. Down under, the Australian dollar collapsed like a house of cards due to a surge in virus infections and lockdown restrictions in Australia.

Hong Kong stocks stole the spotlight in August as the tech-heavy Hang-Seng Index briefly tumbled into bear market territory, dropping more than 20% from its mid-February peak. The descent was driven by China’s regulatory crackdown on sectors ranging from financial technology to education and gaming.

Risk-off was the name of the game during the final month of Q3 thanks to inflation fears, growth concerns, and mounting uncertainty over Covid-19. As inflation made itself at home in the United States, Federal Reserve policymakers were forced to accept that inflation proved to be larger and more long-lasting than expected. The terrible combination of growth doubts, turmoil surrounding China’s Evergrande and Fed taper fears saw the S&P500 fall 4.8% in September.

Oil prices exploded higher in October, with WTI rising beyond $80 for the first time since 2014 as surging natural gas prices spurred greater demand for crude ahead of winter.

Tight global supply and robust fuel demand in the United States and beyond energized oil bulls. WTI concluded the first month of Q4 roughly 10% higher while Brent was not too far behind gaining 6%. Interestingly, the IMF and World Bank both issued warnings over rising inflation.

After “talking about talking about” tapering for many months, the Federal Reserve finally made a move in November.

This marked a crucial turning point as it stepped away from its emergency policy. In a process known as tapering, the Fed was set to reduce $120 billion in monthly purchases of Treasuries and mortgage-backed securities. The mighty dollar appreciated across the board, boosted by increased expectations for a reduction in the Fed’s asset purchase and interest rate hike, possibly in late 2022. During this month, the World Health Organization (WHO) also declared a new coronavirus variant to be “of concern” and named it Omicron. It was first reported to the WHO from South Africa on 24 November.

Growing uncertainty over the Omicron variant weighed heavily on market sentiment in December. With the new variant in town spreading faster than the more prevalent Delta, this clouded the global growth outlook as countries across the globe announced tighter restrictions.

The end of 2021 saw major central banks turning hawkish in the face of rising inflation.

As one of the largest central banks in the world embarked on the path to policy normalization, other banks wasted no time to tighten. We saw the Reserve Bank of New Zealand (RBNZ) raise interest rates in November, the Fed doubling down on its stimulus taper in December, and the Bank of England (BoE) also surprising markets by hiking rates. Indeed, with US inflation skyrocketing 6.8% in the year through November and consumer prices soaring across the globe, this offers a taster of what to expect in 2022.

One key thing to keep in mind is that the S&P500 closed at record highs 69 times this year despite the global growth fears and covid related uncertainty.

US equity bulls were certainly in the driving seat throughout 2021 with the S&P500 up over 27% year-to-date, marking its third straight annual increase.

There is no doubt that 2021 was a historic year defined by runaway inflation, coronavirus variants, and resilient stock markets.

With persistent inflation likely to remain a major theme in 2022, it will be interesting to see whether this forces more central banks to tighten monetary policy. Let’s not forget about the current Omicron menace and risks of new variants potentially clouding the global economic outlook. Equity bulls dominated the scene this year but will we see the same in 2022? Or will the combination of rising inflation and tighter monetary policy end the bull run?

We saw some extreme events throughout 2021 with the show set to continue in 2022. It may be wise to fasten your seatbelts in preparation for another eventful and potentially volatile year for financial markets as 2021 slowly comes to an end.

By Lukman Otunuga Senior Research Analyst

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.