The army of Reddit Retail Traders which last week caused an uproar in markets, has now seen the majority of that momentum begin to fade. GameStop, AMC and Silver were all huge gainers last week, however have so far been in the red to start this week, with GameStop falling to as low as $74.32 at one point on Tuesday, after trading at a high of $469 last Thursday.
So as the dust settles a week on from the start of the GameStop rally, many have already started to ask the question, what next? The rise of the Retail Trader has been well documented, however where will they turn their attention to next?
Below we explore the possible options of which financial markets could benefit most from retail intervention.
Where to look for opportunities?
Over the last year, markets have been extremely volatile with historic opportunities being created at every corner. From Gold reaching new highs in August, to Oil prices going below zero a few months prior to that. These came, as the pandemic created movements in financial markets not seen before, none of which were easily predictable.
This is where the next opportunity will lie, in the unpredictable, which likely will stem from a Black Swan style event. The problem is with such occurrences, it is hard to predict when they will occur, however below are the market places which have the best chances of creating the next “unexpected” trading opportunity.
Although Bitcoin and a few other Alt-coins have recently recorded new highs, with the former rallying to as high as $42,000 last month, many believe that more could come.
The rise of retail investors, interested in decentralized systems may fuel demand for crypto, however with many unable to afford the higher priced coins, could we begin to see new surges in numerous others, similar to what we’ve seen recently with Dogecoin?
It is clear now that Crypto is here to stay, with the likes of Elon Musk recently endorsing this marketplace. However what is still unclear, is of the “best of the rest” or non-BTC coins, which could make a similar run, and enter a 5-digit mark?. Many had believed that Ethereum could be a possible option, however with it trading just above $1,500 – could there be more to come?
No market benefits more from the unexpected like Gold and precious metals do, which is why we saw the XAUUSD break past its 9-year resistance, to record an all-time high of $2,075 in August of last year.
The majority of us remain optimistic about the future and a post-pandemic world, with many anticipating a return to normalcy as a result of the COVID-19 vaccines. However, as we saw towards the end of last year, this may not be as straightforward as we hope. A second, if not third wave of the virus has now impacted nations the world over, with new variants also being found.
Gold prices have continued to remain relatively calm, as it became deaf to the noise, however what happens if the cries grow louder, and new unexpected setbacks occur – will Gold, and other precious metals in general react, as investors seek safe haven assets?
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Senior Market Analyst