The past decade has been quite eventful for global finance, marked by significant changes that have influenced economies, markets, and investment strategies. A perfect storm of disruption swept through the economy when the COVID-19 pandemic struck, unleashing a devastating downturn and sending markets into a tailspin. Governments and central banks responded by implementing scale financial aid packages as well as easing monetary policies to stabilize economies. This transformative era brought remote work to the forefront, further accelerated by the growth of eCommerce. Entire sectors such as retail, hospitality, and travel, struggled to stay afloat amid the financial crisis.
In 2021, cryptocurrencies experienced a dramatic rise, decline, and subsequent recovery that has been one of the most important narratives in the last ten years. Bitcoin saw its price surge from a few hundred dollars to nearly $69,000 in November of that year. This sudden increase was fueled by the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs). However, the crypto market faced volatility and regulatory scrutiny, which led to the collapse of Terra/Luna stablecoin and the FTX exchange.
The crypto market has seen a resurgence in 2024, with a market cap of approximately $2.66 trillion, nearing its record high from 2021. This renewed interest is mostly fueled by the approval of Bitcoin exchange-traded funds (ETFs) and meme coins. According to Michael Graw from ReadWrite, investors often debate whether to buy meme coins as a good investment option. These coins’ extreme volatility makes them an excellent investment for those willing to take a risk for potentially huge profits, but others are more conscious of the potential for these coins to go nowhere. However, as of 2024, the meme coin market cap is at $60 billion, highlighting the sector’s expansion and the crypto market’s recovery since its crash in 2021.
The Wall Street ruckus of 2021, aka the GameStop saga, made news globally, shocking investors everywhere. In early 2021, an army of small investors chose to influence stock prices through a Reddit forum. Their target? GameStop, a struggling video game retailer. Retail investors started noticing hedge funds were heavily betting against GameStop’s stock. In response, they joined forces to buy GameStop shares en masse, driving the price up significantly. A barrage of financial downturns left hedge funds reeling, their losses piling up. What began to surface were the concerning signs of market meddling and the uncertain effects of online trading hubs like Robinhood on the retail investor community.
Brexit was a tumultuous time when the UK chose to leave the European Union. This decision impacted the pound’s exchange rate as well as creating “passporting” rights to the City of London’s global financial hub. Banks took a huge hit as fluctuations in exchange rates sent their profits tumbling. This was due to the extreme fluctuations in the value of the pound which influenced the cost of international transactions and the valuation of foreign assets. Banks found themselves fighting to stay upright amidst the turbulence of currency fluctuations, which threatened to capsize the entire financial boat.
Global inflation, particularly following the global pandemic, impacted the global finance world. This led to several supply chains being disrupted and energy prices skyrocketed. As the increase in demand rose, so did the inflation levels. This high level of inflation had not been seen in decades. Several central banks, including the European Central Bank and the U.S. Federal Reserve, responded with aggressive interest rate hikes. Economic jitters set in, with concerns about a looming slowdown and the dreaded R-word: recession.
The rise and decline in popularity of Special Purpose Acquisition Companies (SPACs) was an important trend that occurred in the financial markets. SPACs were a popular way for businesses to go public without a traditional IPO. However, several SPACs underperformed, leading to a decline in popularity due to regulatory scrutiny and poor returns. As markets fluctuate with astonishing speed, the reality check hits: alternative investments are not always the silver bullet they’re cracked up to be.
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