Monthly Market Muhsings - April 2021

Markus Muhs - May 05, 2021
NO, I will not include Bitcoin or Dogecoin on my market tables. Unless it’s for the purpose to raise the flags of bubbledom. 
You know, I hear all the use cases for blockchain and can see how Bitcoin may actually have value. On a lark, I bought myself a little bit of one of the new Bitcoin ETFs available in Canada, fully expecting it to plummet right after I purchased (hasn’t yet, but just wait!). If only there was a Dogecoin ETF.
The insanity around Dogecoin, just as with GameStop and other “meme stocks” in January, proves how artificial the prices of these things are, and that has me worried. If Dogecoin can explode to a market cap of over $50 billion just because people tout it on Reddit or because Elon tweets about it, likewise if shuttered movie theater chains or video game stores can see their prices skyrocket by billions, what does that mean for the actual prices of more serious cryptocurrencies like Bitcoin or Ethereum? How much of their bubbly prices today are intrinsic and how much just represents today’s overall insanity?
Bill Maher did a good rant on cryptocurrency last week. I’m sure there will be crypto-evangelists saying “you just don’t understand the blockchain, Boomer”, but if you watch it through to the end he makes a really good case about the environmental impact of cryptocurrency mining. I mean, crypto can have everything going for it, but when the forces against it are government (not wanting people to use a currency they can’t track/control) and the powerful environmental movement, I don’t know where that leaves them.
One thing that has become really apparent in the table above, for the past month, is that more than asset prices going up it’s really apparent the USD is going down. U.S. stocks up more than Canadian, while the CAD is up vs the USD. Every major currency gaining on the USD. The major commodities gaining. It’s no wonder so many are turning to crypto currencies! With gold and silver languishing, perhaps cryptos are the only hard currencies?
Yes, I'm raising the spectre of inflation, but it doesn't have to be bad inflation. Too many of us either have no adult experience with inflation (I don't... inflation's been pretty tame since 1999) or the only bout of inflation we remember or heard about was the awful stagflationary period of the 1970s. That's not necessarily what we'll see, as it's more likely a strong re-opening economy will lead to a healthier demand-based inflation as was experienced in the decades following World War 2. Time will tell.
Investment Advisor & Portfolio Manager