- An overview of the markets’ performance in Quarter 1 2021
- Analysis of specific sections of the different markets: crypto, forex, metals and stocks
2020 was a peculiar year on many fronts. From our social interactions to how we work; everything changed. Needless to say, the markets also experienced a shift in patterns and trends. The start of a new year came with the hope of improvements to the current scenario with ameliorations to both our lifestyle and the economic scenario. Quarter 1 of 2021 did present us with some predicted outcomes and some unexpected situations too. So, today we’re having a look at the principal markets and the key events that characterized each one of them.
Quarter 1 for Crypto
Let’s kick things off with the enfant terrible of the trading world. A lot of exciting things were brewing in the crypto world during the first three months of the year. We’d say that the biggest shift we’ve observed is the increasingly widespread adoption of digital assets by corporate stakeholders and big names. For instance, Tesla made the headlines when it announced that it invested $1.5 billion in bitcoin and commenced plans to start accepting it as a form of payment. On the payment front, Visa became the first principal payment network to accept USDC. This is a digital stablecoin that is pegged to the USD thereby creating an important stepping stone between the two worlds. Similarly, Coinbase made waves when it recently went public. Two key milestones that characterized the last months were the surpassing of the $2 trillion ATH for the crypto market and the $1.1 trillion ATH for bitcoin.
Quarter 1 for Forex
During the first quarter, investors were keeping a close eye on the number of virus cases and vaccination rollout efforts. It is safe to say that the USD is a clear top performer among the fiats. Thanks to the positive economic forecast in the states, the greenback was able to register a strong performance. Across the Atlantic, the GBP also showcased a solid performance backed up by the strong vaccination efforts. However, the Euro’s performance lagged behind as a result of the weak vaccination rates across the old continent.
The last quarter of 2020 was characterized by a positive performance for gold. This was directly linked to the safe haven status that this metal possesses, particularly in uncertain times. However, key events during the first quarter of this year have shifted this scenario. As of the end of March, gold had declined by an impressive 8.1%.
Amongst the influencing factors, one can highlight the US presidential elections and the encompassing stimulus measures plan. There was also the improved performance of the USD, and institutional endorsement of digital assets which diverted interest from the yellow metal. During the first months of the year, investors were willing to take more risks. As a result, they stayed away from ‘safer’ options like gold.
One phrase has characterized the stock market these last 3 months – meme stocks. In an unlikely twist of event, online groups were able to influence heavily the stock prices of companies with a subpar performance. It’s safe to say that this scenario is largely unprecedented since it was the first time that normal investors were able to influence stock prices in such a tangible way. No one would have guessed that the largely written off GameStop would become the underdog that makes an epic return. The event certainly opened up broader discussions about the dynamics of the market.
Apart from the uproar created by the so-called meme stocks, the US equity market experienced a surge. This surge was backed up by increasing confidence that was influenced by the stimulus plan and a very efficient vaccine rollout across the country. Pandemic-induced spending patterns had led the big tech giants to experience a positive performance during 2020. However, this has been less pronounced during the first quarter of the new year. Overall, it can be said that stocks have displayed a solid performance but not a spectacular performance so far.
The pandemic is still influencing our societal and economic patterns, well into the year. However, there is still hope that more efficient vaccination efforts around the globe will contribute to stable economic outlooks and the return to some form of normality.
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