We live in the greatest time in human history.
First, currencies have long abandoned the Bretton Woods system: the dollar is not backed by gold anymore, and the euro and other currencies are not pegged to the value of the dollar. Everything is governed by supply and demand.
Second, retail brokers have made trading available to everyone. You can start trading with just $100 in your pocket, while some 50 years ago, you’d need a million or even more to enter the financial market.
Nowadays, we have many more opportunities to earn, even with small initial capital.
And a new year, as we know, always brings new trading opportunities. Let’s talk more about them in this article.
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The world in 2021 and what to expect
2021 should be obviously better than 2020. Unless, of course, another black swan event occurs.
For those of you who are not familiar with the term, a black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are very rare, they can cause chaos and catastrophic economic damage, having a huge negative impact on financial markets.
2020 in review: major events
At the end of 2019, analysts forecasted that 2020 would be the year of risky assets:
- Bitcoin
- small cap stocks
- and new ICO projects.
They said that the demand for atypical assets would be observed for two reasons:
- Trump’s trade war with China
- Brexit
But when COVID-19 broke globally, all the events of the past year faded into the background.
The global economy collapsed. And to help it recover from the pandemic and mitigate the negative effects of the outbreak, governments and central banks around the globe injected trillions of dollars into their economies, unleashing unprecedented monetary stimulus:
As you can see, it was widely covered by all news media.
And here the analysts who had foreseen the growth in risky assets in 2019 triumphed. While central banks were printing money and boosting the economy, investors fled to high-risk assets. As a result:
- Stocks went up. S&P500 hit the 3800 mark
- Cryptocurrencies skyrocketed. Bitcoin surged past $34 000 (!)
Great, someone made billions of dollars again. But what should those who didn’t profit from these events do? What to expect in 2021 and how to generate income in the new year? Let’s highlight a couple of points:
Economic boom
Now it may seem that the S&P500 and Bitcoin have both reached their peaks and won’t rise any higher. But they can. And traditional currencies are very likely to follow them as well.
The world is waiting for the COVID-19 vaccine to be finally approved for mass production, which should lead to a decline in the number of coronavirus cases. The likelihood that this will happen in 2021 is quite high.
Once this happens, investors and big market players will pour the money they had been saving up in 2019 and 2020. The market will begin its vertical rise.
US Dollar may plummet
Biden will replace Trump on January 21.
The new president is charting a course for significant political changes:
- Biden wants to rebuild tarnished relationships with allies
- And the slogan “America First” will recede into the background.
Also, the new president-elect doesn’t tweet every morning, like his predecessor. This means that the dollar, oil and the stock market won’t be threatened by the verbal intervention.
Biden openly stated that he will not strengthen the dollar’s value. As you can imagine, the market took it literally:
Investors immediately made their bets and began to buy out other currencies. The Euro, AUD, NZD, CHF and EUR are currently appreciating and their growth is likely to continue throughout 2021.
The risk-on era is approaching, when investors will completely abandon safe-haven assets. Money from gold, yen and dollar will “migrate” to other currencies:
- Australian dollar, AUD
- New Zealand dollar, NZD
- Swiss Franc, CHF
- Euro, EUR
It’s worth noting that in 2020 AUD and NZD have already added in value significantly. In 2021, the uptrend will preserve:
AUD/USD and NZD/USD saw growth by more than 25% over the past six months
2021: key predictions
Here are 3 major development to look forward to in 2021:
- The US dollar will drop
- Bitcoin will be expensive, probably trading above $20,000
- AUD, NZD, CHF and Euro will rise in price
Don’t forget the stock market, which shouldn’t let you down either.
In the next article, we will present our outlook on cryptocurrencies, but for now… Check out our publications on social media, you will find more useful articles and forecasts there:
