2021 was a year marked by rising inflation and uncertainty surrounding the COVID-19 pandemic. Three asset classes outperform under such an environment: Bitcoin, WTI oil, and the S&P GSCI.
Rising inflation was the dominant theme in 2021, but higher prices of goods and services in the developed world did not lead investors into the classic hedge – gold. Instead, other asset classes outperformed, such as Bitcoin, WTI oil, and the S&P GSCI index.
Here is a technical analysis perspective of the top three winners in 2021. Can they outperform other assets also in 2022?
Bitcoin made two all-time highs in 2021. While trading with a bullish tone for most of the year, the failure at the $65,000 area brings a possible double top pattern into discussion.
Moreover, despite gaining 59.8% in 2021, Bitcoin traded with a bearish tone in the last two months of the year. One can note a head and shoulders pattern with the neckline at $45,000. A break and close below triggers a run to the measured move seen much lower, around $15,000.
While Bitcoin’s technical picture looks bearish currently, the opposite is happening with the WTI oil. Oil gained 56.4% in 2021 after rallying from negative levels in 2020.
On its way up, it made several highs, and it peaked at $85 in late October. However, the rejection was not strong enough to break the series of higher lows, thus keeping the bullish bias intact. As dynamic support in the $65 area held, the path of least resistance remains the upside, and traders should not be surprised to see the WTI oil making a new higher high.
In third place in 2021, the S&P GSCI index follows a pattern similar to the one seen in the WTI oil. GSCI is the acronym for Goldman Sachs Commodity Index, and it reflects investors hedging against inflation. It delivered 37.1% in 2021, outperforming the S&P 500 or the Russell 2000 indexes.
Just like the WTI oil, the index reacted to dynamic support in the $520 area and bounced. It now eyes a new higher high, and if inflation continues its march higher, the path of least resistance remains the upside. As such, another attempt at the $600 is likely.