🌀 Crypto's chaotic week
![_Home improvement, feat. crypto stools [Morsa Images/E+ via GettyImages]_](https://cdn.robinhood.com/static_content/mwphzyq69oso/en-US/assets/files/3urYn5P4SNqmMmTv4L2vqa_1_GettyImages-1208374839.jpg)
Hey Snackers,
The CDC lifted mask mandates for FVPs (fully vaxed peeps). Now, the beauty industry is preparing for a "buy the lip" situation. Matte lipsticks are already rallying.
Stocks fell yesterday on a classic 2021 theme: worries that the Fed will raise interest rates to slow inflation. Meanwhile, crypto plunged. Here we go...
Bitcoin’s big plunge: how it relates to Elon, China, and kitchen furniture
A Shiba with a bone to pick... ICYMI, cryptocurrency prices have been plummeting. A week ago, Bitcoin was trading around $57K, down from its record of $63K in mid-April. At one point yesterday, Bitcoin plunged to ~$30K. Meanwhile, Ethereum, Doge, and Litecoin all dropped more than 40%, before recovering (some) losses.
- Nearly $1T has been wiped off total crypto market value since last week, when it was over $2T.
- Shares of crypto-invested companies like Coinbase, Square, and MicroStrategy — an analytics company that invests in Bitcoin — also dipped.
Decrypted... More than half of crypto investors say they’re buying for the long-term. Still, crypto prices are infamously volatile compared to other assets. The current annualized historical volatility for the S&P 500 index is about 15% — for Bitcoin, it's 80%. Historical volatility = how much an asset price deviates (on average) from the average price over a time period. What may have caused this latest plunge:
- Elon: BTC fell last week after Elon tweeted that Tesla would no longer accept it. This week, it fell again after Elon's reply in a thread ("Indeed") led to speculation that Tesla had sold Bitcoin. It hadn’t.
- China: On Tuesday, China reiterated its ban on offering cryptocurrency services, saying crypto is dangerous to the financial order.
The three-legged stool of crypto cracked... Cryptocurrencies sit upon a three-legged stool. The first leg: public enthusiasm (culturally-driven momentum). The second: corporate validation (like company investments, or crypto payments support). The third: government regulation — or its lack thereof, a key element of crypto. Last week, Elon cracked the corporate validation leg. This week, China cracked the regulation leg. That doesn't mean the crypto stool is broken. But when any of the legs show cracks, prices tend to wobble.
The House Hype lives on: Home Depot's killer earnings reveal something else, too
Still retiling the bathroom... When lockdowns hit last March, Americans shifted their spending from restaurants and clothes to the only place that mattered: home. People re-painted kitchens, and bought enough scented candles to light a small town. We thought the DIY House Hype might start slowing down last May. A year later, the House Hype is going stronger than ever.
- Wild: Home Depot's sales soared 33% last quarter to $37.5B. For reference: Home Depot's quarterly sales growth for the same quarter in 2019 and 2018 was ~5%. Oh, and profit nearly doubled.
- Lowe's sales jumped 24% on the continued home improvement hype.
"I was lightning, before the lumber"... If Imagine Dragons wrote a home improvement song. Home Depot says there's a "storm environment" for lumber right now. That's partly thanks to the housing market boom and a reopening-driven building frenzy. Zillow-scrolling just got pricier...
- Wild stat: Lumber prices have more than 4X'd in the past year. The surge has added $36K to the price of an average new single-family home.
- Soaring lumber demand boosted Home Depot's sales, both to professionals (think: contractors) and DIY customers (think: Uncle Bobby).
"Homevesting" has arrived... The initial House Hype was driven by spending to make our 24/7 biodomes more enjoyable. You had to stare at the bedroom wall all day, so you painted it pastel blue. As the US reopens, we're seeing a different kind of spending: "Homevesting." Home sales are hitting 15-year highs, so prices are soaring. Now, people are investing to level-up their precious homevestments. Home Depot's CEO thinks that's a great sign for the home improvement industry looking ahead.
What else we’re Snackin’
- FordIt: Ford unveiled its electric F-150 pickup truck yesterday, undercutting rivals with a $40K starting price tag.
- Oated: Vegan milk icon Oatly raised $1.4B in its IPO, giving the Oprah-backed company a frothy $10B valuation.
- TMinus: Bank of America joined the Paxos Settlement Service, a blockchain-based platform for same-day settlement of stock trades.
- Tarjay: Target's sales jumped an expectation-beating 23% last quarter, partly thanks to revenge spending on clothes (always in the front).
- Square: Shares of website-building service Squarespace plunged after its NYSE debut. The US IPO market hasn't been so hot lately.
- Ok: Chinese EV maker Evergrande is worth more than Ford and GM — without ever having sold a single car.
Thursday
- Oatly IPO
- Weekly jobless claims
- McDonald's annual shareholder meeting
- Earnings expected from Ross, Kohl's, Tencent, Ryanair, Manchester United, and Victoria's Secret-owner L Brands
Authors of this Snacks own: Bitcoin and shares of Tesla
ID: 1656460