I have said it a thousand times and I repeat it now. No one can predict the future. No one is a fortune teller. What we commonly call “predictions” are bets on a probable future. These are inaccurate projections with the data that we have at hand (which are few). Every prediction is more a reflection of the present than an accurate picture of the future as such. We are talking about expectations. Not of certainties. No, Elon Musk does not know the future. No, Goldman Sachs does not know the future. No, your favorite influencer does not know the future.
There is not a group of analysts locked in a mysterious room with all the answers. In most cases, indeed, those so-called sages speak of the future with great authority, but that is more marketing than clairvoyance. We know that the public does not react very well to ambiguity. The public wants to have the illusion of security to calm their anxieties. So many give what people want to hear. How do we know that these “wise men” do not know the future? For his record. The only analysts with a good record for predictions are those who promise us the uncertain. There will be surprises. Things change. The markets fluctuate. Here are a couple of predictions that will come true. The rest is a show.
Keep reading: How to invest in 2022?
Bitcoin and the Fed
Many in this space suffer from chronic blindness caused by ideology. Libertarians are a very large block in this community and many of them trust dogmas more than reality. What is the reality? Bitcoin is not a “safe haven” in the financial sense of the term. We are not saying here that it has not been a profitable asset. I mean “safe haven” as the dollar or T-bonds are “safe havens.” Security as a synonym for stability. This implies that in times of uncertainty investors seek stability and, consequently, the price of Bitcoin plummets. They do not believe me? The evidence is everywhere for those who open their eyes.
We are not talking about highs and lows. Let’s talk about the opening and closing price in the span of one year. In 2021, Dow increased 19%. Nasdaq rose more than 22%, the S&P 500 more than 27% and Bitcoin more than 60%. On January 1 of last year the price of Bitcoin stood at almost $ 30K and on December 31 the price stood at $ 46.2K. During 2021, the United States grew a little more than 5%. And the World Gross Domestic Product stood at 93 trillion dollars. To put it in context, the current capitalization of Bitcoin is 816 billion dollars (+/-) and that of the entire cryptocurrency market is 2 trillion dollars (+/-).
It is estimated that 2022 will not be as good as 2021 when it comes to the growth of the Gross Domestic Product and when it comes to the growth of the stock markets. Problems in the distribution and production chains will continue to wreak havoc in 2022. In addition, the Federal Reserve (FED) of the United States intends to reduce its bond purchases and raise rates. If we take into account the level of public and private debt, it is not very unreasonable to think that the financial sector will grow more slowly this year. Now, to hit $ 100K (Bitcoin price) this year, 2022 needs to be better than 2021. Right now, they just don’t give the numbers.
Read on: Bitcoin to $ 100,000 in 2022?
Internet, Metaverse and, in addition.
This long-awaited goal (the $ 100K) is only possible through an adoption miracle. Obviously, we need better custody services, more ETFs, a tech boom, and very favorable regulation. Most likely, however, this process will gradually consolidate. So it is best to think in terms of the triennial period 2022-2023-2024.
A thousand things will come. And a thousand new fashions. Obviously the digitization process will continue. Consequently, everything related to the digital economy will prosper (crypto, fintech, NFTs, Metaverso, Defi, software). Naturally, we experiment with many things. And we will have many opportunities for speculation. Of course, time will be ruthless as always. Many projects will die on the way. And, to the disappointment of many, only a few will survive.
Geopolitics
We live in a fragmented and divided world. So, people seek safety in their tribe. This creates a dichotomy between us and them. What stimulates radicalism and confrontation. In 2022, we will surely have more authoritarianism, more tensions, more populism, and more idiocy. China will continue to generate controversy in its fight for global leadership. Xi Jinping will remain in power and his totalitarian tendencies will continue. Russia, of course, will remain a stone in the shoe, fishing in a rough river at the slightest opportunity.
It is an election year in the United States. And the Democrats are in danger of losing space. In other words, we will have a year of chaos and disorder in liberal democracies. New variants of the Coronavirus, the antivaxx movement, social divisions, economic tensions and political fights will continue to create a climate of widespread mistrust. Hence, many will call for “strong-arm” leaders as a solution. This may imply a setback in terms of democracy and in the globalization process. Regrettable.
Latin America
2022 promises to be a difficult year for Latin America. Politically, we will continue to move to the extremes. Which means a collapse of the center. It is unfortunate for Colombia that it could take a turn to the radical left. In general terms, we could be experimenting with a return to the era of the cadillos (Mexico, El Salvador, Brazil, Bolivia …). In other words, authoritarianism has once again tempted Latin Americans. The cult of personality is a vice that, apparently, we cannot give up. Venezuela, Cuba, and Nicaragua will continue in dictatorship.
Read on: Why Economists Lack of Trust: “Bitcoin fix that”?
In economic matters, we will have very slow growth in 2022. Populist and mediocre governments scare capital and discourage investment. And, of course, our over-reliance on raw materials and low-value-added products is our condemnation. Even Africa will grow more than Latin America this year, according to the projections of international organizations.
Remittances and currency controls could continue to stimulate cryptocurrency exchange and fintech initiatives in the region. In other words, not everything is bad for Latin Americans. In Latin America, the money usually goes into a couple of sectors. Well, you have to follow the money.
This is not the time for pessimism. In fact, it is a time of many opportunities. Uncertainties are not the end of the world. They are uncertainties. It is on our part to discover the opportunities.