It’s been a year like no other in the investment world. 2021 was the year the investment world recovered from the knockout blow of the pandemic and scrambled to regain what it lost in 2020 and more. In a reversal of fortune, this year has seen investors turn just about every handicap and hardship to their advantage by boldly charting new investment paths into a world of opportunity.
As the global economy rebounded and profits soared, stock markets soared to new highs. We now have an exclusive trillion dollar club made up of five US companies with a market value of over $1 trillion.
The year saw the emergence of many new trends. Lockdown boredom and stimulus checks have hatched bizarre investment themes, some including cult armies of speculative investors using internet forums to pump worthless stocks from companies hovering around the drains (looking at you , GameStop and AMC Entertainment Holdings) to ridiculous heights.
The year also saw the emergence of memecoins, low-cost trading apps, teens trading cryptocurrencies, an NFT buying frenzy and a taste of the metaverse, for n to name a few.
How will this transformation affect how we do business in 2022? Let’s take a look at some megatrends that are likely to shape the trading and investing space in the coming year.
Sustainable investing has seen an unprecedented boom in 2020. The Covid-19 pandemic has proven to be a catalyst for environmental, social and governance (ESG) investing. The asset class attracted record inflows of $21.5 billion in the United States, according to a Morningstar report. In fact, each of the first three quarters of 2021 saw higher inflows than the corresponding quarter of the previous year.
Globally, sustainable funds had already racked up a record $508 billion in investments in the first three quarters of 2021, while their assets under management reached $3.9 billion at the end of September, according to the data. Morningstar data.
Freed from a myriad of myths and investor skepticism, the trend is well entrenched. ESG has become a key theme in the investment space, both due to the pandemic and the global response to it.
For a growing number of investors and companies, ESG issues are now major economic determinants with a significant impact on profitability. From gender and racial equality to global warming and clean energy, everything is now on the table under the ESG umbrella. Everything indicates that the trend is set to continue unabated in 2022.
This was the year that non-fungible tokens (NFTs) exploded into mainstream consciousness. From social media platforms to financial media, there is no escaping the NFT chatter.
NFTs are non-fungible cryptocurrency tokens – this means the tokens are not interchangeable, unlike fungible assets like fiat currency or Bitcoins – which operate on a blockchain network, a digital ledger that records all transactions of cryptocurrency.
Earlier this year, NFTs caused a stir around the world when artist Beeple sold his works, Daily: first 5,000 days, for a staggering $69 million. The sale sparked an NFT mania that attracted $10.7 billion in investment in the third quarter of 2021, according to data from market tracker DappRadar.
As NFTs become a multi-billion dollar industry, they attract art lovers and memorabilia seekers who invest millions of dollars in unique digital creations. The appeal of NFTs as an investment asset has become so irresistible that even music celebritiessports stars and corporations are entering the game, both as buyers and sellers of digital tokens.
At the current rate of growth, the global NFT market is expected to reach US$80 billion by 2025. Clearly, NFTs are here to stay and their popularity is set to continue unabated over the coming year.
If you’re curious to learn more about NFTs, here’s an introduction that’s got you covered.
Touted as the biggest idea in technology, the Metaverse represents a seismic shift in the digital realms we inhabit. As a buzzword, metaverse refers to a variety of virtual experiences, environments, and assets that have gained traction during the pandemic-induced transition to the digital world.
Simply put, the metaverse is a giant community cyberspace built at the intersection of virtual reality and augmented reality. It promises an immersive world where millions of users, or their digital avatars, can participate in a range of activities while socializing, working and having fun.
If Big Tech is to be believed, the metaverse is the future of the internet. Obviously, these companies are jumping their feet into the metaverse first. In October, Facebook decided to rebrand itself as Meta to reflect its growing interest in the metaverse. Microsoft, Walt Disney, Apple and Nike have also invested billions of dollars in metaverse technology, a market that is expected to grow to $800 billion by 2024 from $500 billion in 2021.
Still in its infancy, the most evolved metaverse could be a technological leap forward that can be compared to the transformation of the Web from naked text and images in the 90s into a place where you can watch TV series, buy products groceries and gadgets, and create a workplace accessible from anywhere in the world.
For investors, 2022 could represent the opportunity to enter the ground floor of the metaverse movement.
On the heels of the broader cryptocurrency boom, there is a sub-category of altcoins that are fetching big investments. These virtual tokens are memecoins, a category of lightweight cryptocurrency coins inspired by memes, jokes, and internet trends.
Although there are as many as 124 memecoins currently in circulation, according to CoinMarkatCap.com, the two dog-inspired memecoins dogecoin (Doge) and Shiba Inu (Shib) remain the king of the hill in this category.
Both Doge and Shib are inspired by the same breed of dog, Shiba Inu, and have now amassed a large enough following to place the tokens among the top 15 cryptocurrencies by market capitalization, according to CoinMarketCap.
As millennials and Gen Z investors piled into wacky coins, bewitched by low-stakes, high-payoff gambling, the market capitalization of memecoins like Dogecoin and Shiba Inu ballooned dramatically to $23 billion. and $20 billion, respectively, as of December 22.
The popularity of Memecoins is also attributed to frequent shoutouts from celebrities on social media. Tesla CEO Elon Muskrapper Snoop Doggrock star Gene Simmons and entrepreneur Mark Cuban are among the loudest cheerleaders who have amplified both the visibility and desirability of memecoins.
While coins are seen by many as a source of comic relief during the onslaught of Covid-19, their ever-increasing popularity and price point to a growing seriousness among the investing community about memecoins.
Plus, Mr. Musk isn’t quite done pushing Doge to the moon. With Tesla now accepting dogecoin as a legitimate means of payment for its merchandise, we certainly haven’t heard the end of Doge and other memecoins. These tokens will likely continue to be popular among younger investors as an attractive choice for play money investments.
Low cost trading apps
The year saw a boom in low-cost trading apps that brought a whole new dimension to investing. Although as a concept online trading platforms have been around for a while, the popular online trading app Robinhood and Covid-19 have really opened the floodgates for millions of mostly young stock traders. .
The popularity of these low-cost or no-cost apps among DIY investors has led to a barrage of new trading platforms creating an ecosystem that underpins a range of investment trends: stock trading, stock memes, crypto- currencies, NFTs, decentralized finance (DeFi), you name it.
Users download the trading apps for their simple interface, with no commissions, no minimums, and access to no-frills trading in seconds. These apps have taken the power of trading from legacy institutions and put it into the hands of young investors. This had a dramatic impact on the rise of cryptocurrencies as an investment asset.
Cryptocurrency exchanges and trading platforms – such as Binance, Kraken and CoinBase among others – offered fractional ownership of prohibitively expensive cryptocurrency coins such as Bitcoin and Ethereum, fueling demand for these virtual tokens and others. The gaming and habitual features of these apps have attracted hordes of newbie traders willing to dip their toes into the cryptoverse.
Since cryptocurrencies are the building blocks of NFTs, Metaverse, and DeFi, the popularity of trading apps has played a big role in the rapid rise of these investment themes and several peripheral digital trends.
Thanks to these apps, even worthless memecoins had their day in the sun as smartphone-wielding investors joined the Fomo-fueled frenzy in search of bumper Bitcoin-like returns.
Looking at their growth trajectory, these apps aren’t going anywhere. If a crushing global pandemic couldn’t derail their explosive growth, it’s hard to see how 2022 won’t be another successful year for low-cost trading apps.
Updated: December 28, 2021, 5:00 a.m.