Crypto on the Move

by JDH on April 3, 2021

I know you come to this site to read my disjointed and rambling thoughts on real things, like the stock market and gold, and not unreal things, like the crypto market, but here’s the thing: the “real” world isn’t doing so well at the moment.

While the United States appears to be “over the hump” with COVID-19, here in the backwaters of Ontario, Canada, we have more patients in the ICU than at any time since the start of the pandemic.  Thanks to our incompetent federal politicians we don’t have an adequate supply of the vaccine, and thanks to our idiot provincial leaders we can’t figure out how to distribute what we have.  They have decided, in their infinite wisdom, to distribute the vaccine based on age instead of need.  So today, if you are 55 years or older you can register to go to a drug store and get the Astra-Zeneca vaccine, even if you are a stay-at-home worker with minimal risk of infection.  If you are 35 years old and work at an Amazon warehouse that had so many cases even our ineffective government forced them to close, sorry, no vaccine for you.

And yet, in this crazy world, the S&P 500 topped 4,000 for the first time ever this week, the stock market is doing well, and the real estate market is booming.

Why?

Because massive government stimulus is going into assets, so assets are going up.

That trend is very clear in the world of crypto.

As I write this just before 8:00 am on Saturday morning, April 3, Bitcoin is hovering just under $60,000 USD, up almost 9% in the last week.  Ethereum has caught fire, trading at an all time high of over $2,100 USD, up almost 25% on the week.  The fourth largest crypto by market cap, Polkadot, is up over 40% on the week.

The total market cap of all crytpos is over $1.8 trillion, or $850 billion if you exclude Bitcoin.  That’s not insignificant.

In contrast, gold made a double bottom at $1,680 this week, and is trading well below the peak at $2,075 it hit in August, 2020.

It would appear that both the small speculators and the big institutional investors have decided that Bitcoin is a store of value, with more upside, and easier to hold and store and trade than gold, and they are gradually moving their money to “digital gold”.

I don’t expect Bitcoin to ever be a medium of exchange, which is why ETH and all of the other cryptos exist, many with functionality as smart contracts and with other attributes.

My point is that crypto is not just a passing fade.

It’s real.

It’s protection against money printing.

It’s here to stay.

That’s why I have an ever-increasing amount of my portfolio in QBTC and QETH.UN (closed-end funds, currently trading at a discount to NAV), and BTCC.B, an ETF.  It’s an easy way to get exposure, and you can hold them in your RRSP or TFSA, and you don’t have to worry about storing it yourself.

This is not investment advice, do your own due diligence, but give it some thought.

It ain’t going away.

Happy Easter weekend, see you next week.