Musk Makes Bitcoin Tank, but M&A Makes Cannabis Dank
I said this in an article for my other newsletter, Fortune Research, but…
I’ve never seen anybody move asset prices like Elon Musk.
Just one word can send prices to the moon… Or in this case, the garbage can.
Musk has now soured on Bitcoin due to its massive carbon footprint. And although that was well-known a few months ago when he and Tesla Inc. (Nasdaq: TSLA) embraced the digital currency, apparently it didn’t matter until now.
Gee, it’s almost like somebody just wants some attention… and sadly, it’s working.
With Bitcoin down more than $20,000 on the month, the media is eating this up, with every major network running some version of this story.
Source: CNBC
But let’s get real about something. Does Elon Musk’s opinion have anything material to do with the long-term performance of any cryptocurrency?
Of course it doesn’t.
Admittedly, after his tweet, Bitcoin’s price chart doesn’t look so great.
Source: Bloomberg
But even after all this past month’s bearish action, the long-term positive trend won’t officially end until prices get down to about $30,000.
Source: Bloomberg
So why won’t the media let this go? All you need to do is look at those headlines up above the chart.
The media makes money off of our attention, and right now, cryptocurrency in general is attracting us like flies to honey.
Source: Google Trends
There happen to be some other things right now attracting our eyeballs at similar rates… Things like oil, copper, lumber, EV’s and housing.
Source: Google Trends
If you haven’t caught on yet, those things are all tied to a common theme… One we tend to talk about here a lot.
They’re all commodities… Yes, even Bitcoin.
And as I’ve been saying for months now, as an entire asset class they’ve all been going up.
WAY up.
Source: Bloomberg
So if you really want to get a handle on what the media really likes to talk about, just look for the stuff that’s going up the most.
Or down…
Dis-inflation Debut?
Bitcoin is down roughly 30% over this particular slide — something more generally associated with commodities than currencies, by the way.
But there’s one other commodity that has fallen back of late… lumber.
I talked about the shortage in the housing market a couple weeks ago, when lumber was at an all-time high. So it’s been due for a correction for a good long while.
It’s incredibly interesting to us, however, that the two asset classes that inflated the most over the past six months — Bitcoin and lumber — are both dis-inflating at the same time…
Source: Bloomberg
And remember, this is right after the biggest year-on-year inflation print in more than a decade.
If you love spurious correlations, that chart is for you.
So is this the beginning of a downturn, or some other change in the macroeconomic cycle?
Right now, I don’t think so.
But if the industrial commodities — oil, copper, iron ore and steel — all start to pull back at once, we’re at least advising caution.
Probably a pretty good period to sell stuff on green days.
Another Commodity That Has Inflated
There’s another commodity we didn’t touch on in that segment, though, and that is cannabis.
Yes, it’s a commodity too.
Most notably, we wanted to touch on Venture Society favorite The Parent Company, or TPCO Holdings (OTC: GRAMF), which had some good news to announce yesterday.
Source: TPCO Twitter
That’s right, after a few issues of us repeatedly mentioning they wouldn’t stay silent for long, they pulled off a $50 million strategic retail investment, as well as acquiring the best outdoor growing facility in Sonoma County, California.
This increases their stranglehold on the CA market, and the announcement sent shares up 5% yesterday… only to fall right back down in today’s action.
But just imagine how much that “commodity” stock could inflate when they announce their presence in newly-legalized New York… So picking up another quarter tranche on a down day is not a bad idea here.
We’re in an Empire State of Mind over here, and GRAMF is on sale today.
Don’t overthink it.
All the best,
Matt Warder
