As the first fiscal quarter of the year is nearing an end, crypto investors are looking to diversify their portfolios and identify what to invest in next. With rising inflation, the war in Ukraine, and a lack of momentum in Bitcoin and Ethereum, we appear set to end the first quarter of the year on a low mark. But not all is lost, there are options for crypto investors and a diversified portfolio will be the winner at the end of this inflation run we find ourselves in.
Based on current market trends, the biggest winners this past fiscal quarter have been BitCoin, Ethereum, and metaverse tokens like those from Decentraland and Sandbox. With an impressive array of new blockchain layer 2 technologies in the works and with the historic release of the first crypto ETF — it has never been a better time to invested in crypto.
Another winner this past year is energy and financial stocks. Backed by the ever-increasing price of oil, energy flourished. But so did banks and financial firms, primarily due to a hot market for corporate deal-making and an economic recovery that performed much better than anyone anticipated—namely, there were fewer bad loans than had originally been predicted at the height of the pandemic.
All in all, it has been a slow start for crypto investors. As we look forward through the rest of 2022, keep your eye out for how the world continues to grapple with the Covid pandemic. As well as how supply chains will be affected in the coming quarters with a massive backup in the United States and China increasing their grip on an already heavily regulated supply chain.
As always, don’t forget to read up on changing monetary policies as world leaders look to diversify their crypto plans from Russia’s acceptance of cryptocurrencies to India’s legalization process of crypto holdings. Pay attention to how the crypto market reacts to upcoming Federal Reserve rate changes, as we are likely to see several over the course of 2022.
The Crypto Winners
Let’s start off with a look at where cryptocurrencies were last quarter and where they are now. Bitcoin surged in the last fiscal quarter of 2021 at a whopping $65,000 per Bitcoin and a market cap of 1.18 trillion. However, as the world’s global inflation continued to rise and new variants of COVID emerged, the price of Bitcoin and most of all of the other major cryptocurrencies took a beating this quarter.
Research and patience are the two principles crypto investors are going to have to utilize if they plan to take large returns later this year. There are still miniature wins to be made for day investors with altcoins (alternate coins aside from Bitcoin) but the big profits are with the two heavyweights, Bitcoin and Ethereum. With a large majority of faith being placed in Bitcoin.
And an increasing amount of faith being placed in Ethereum as it ushers in a new area for digital ownership through NFTs (non-fungible tokens) and smart contracts. Ethereum 2.0 is rapidly approaching, and brings with it unlimited potential in the dApps market.
Is The Equities Bull Run Over?
The bull run so many investors have been excited about is finally ending – or is it? After nearly 12 months of strong gains for the equities market, the U.S. stock market is finally leveling out as companies reported their 1st quarter in mid-February. And unfortunately, we saw a few tumbles from the S&P 500 down 4.8% and the Dow Jones and Nasdaq Composite posting their lowest numbers since the beginning of 2021.
These numbers reflect an American population that is spending less at the start of 2022 but also that fear around the Covid-19 pandemic hasn’t completely dissipated. With uncertainty in the stock market, crypto and legacy advisors are both encouraging diversification of client portfolios, opting for alternative assets like real estate and alt coins, where there is lower volatility and downside protection in the case that the stock market continues to struggle throughout 2022.
Commodities Continue to Surge
This may come as no surprise, but the commodities market surged in 2021 with more and more people staying at home. This increase of at-home workers and families led to an increase in energy demands, prompting the highest natural gas and coal prices since 2011.
The World Bank also expects the commodity market to average a dramatic 80 percent increase from 2021, citing climate change, higher demand for energy, and a global population that is moving away from the rural and into metropolitan areas. However, the World Bank does predict agriculture and metals to decrease this 2022, following strong gains in 2021.
A Meta Real Estate Market
Mortgage rates are at a record low and inventory is incredibly scarce this first quarter of 2022, all due to a well-performing job market, an increase in savings that are helping the average American purchase a home. Across the nation, there is a high demand for homes. And as Millennials approach the prime of their homebuying years, more and more homes are being sold.
But not all are being sold in the physical world. With a whopping $500 million in gross revenue from metaverse real estate this first quarter, young investors are increasingly looking to purchase lands in Meta projects such as Sandbox and Decentraland. Where parcels of digital land can go for as high as
$400 per square foot.
The world will continue to grapple with the Covid-19 pandemic, but with vaccines now a staple across the largest metropolitan areas in the world, you can expect to see a calmer population and an increase in consumer spending across the board. And as new blockchain protocols continue to spring up every day, pay special attention to the robust Metaverse and how gaming tokens and redefine the way an average individual can play to earn.
With all of that being said, remember that no asset class (yes, even stablecoins) is complete without its risk and times are uncertain as a whole. The best investing consideration for the rest 2022 will be a diverse portfolio with assets across all the major classes and blockchain protocols. As the old adage goes, “don’t pull all of your eggs in one basket.”
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