Weekly Update 21 May 2021 Crypto Carnage

Most assets dropped this week; the major exceptions were gold stocks, which gained 2.8%, and coffee, which rose 1.4%. The worst of the carnage was in the cryptocurrencies, where Ethereum fell 41.6% and the broader index of 30 cryptos dropped 37.9%; Bitcoin outperformed its peers, declining "only" 26.7%. Copper fell 5.7%, but silver ended the week little changed.

Among national currencies, the Chinese Yuan was weakest, falling 2.4%. The CAD, EUR and JPY each declined 1.6%. USD cash and short term notes fell 2.0%, while long term bonds did a bit better, dropping 1.6%.

After hitting a new all-time high last week, Ether dropped hard this week, closing at 40.3 grams, down 41.6%. Some smaller cryptos were hit even harder; for instance, DASH (not in table) fell 50.2%. The broad index of 30 cryptos declined 37.9%. Bitcoin actually did better than most, giving up 26.7%. There are many "explanations" floating around for this "crypto crash", including Elon Musk's tweets, regulatory changes in China and India, and so on. My opinion is that this is a normal, healthy correction in an overheated market, shaking out the weak hands and setting the stage for the next leg of the bull market. A textbook classic opportunity to "Buy when there's blood in the streets, even if the blood is your own".

Although gold stocks were the week's best performing asset, up 2.3%, all other major market indexes moved lower, led by the Dow Industrials, off 2.5%. The Japanese Nikkei was the least bad, falling 0.8%.

Coffee, up 1.4% and silver, unchanged, were the bright spots in the commodity sector. Copper fell 5.7%, the worst performance by any asset outside of the crypto space, and crude oil was close behind, dropping 4.7%.

Year over year, the picture is much brighter! Ether gets the top prize, rising 978.2% in spite of this week's big drop. All stocks, commodities and cryptocurrencies are in the green, along with all national currencies except the Yen (down 9.0%) and the US Dollar (off 8.0%). Treasuries were all lower, but long term bonds fell 22.1%, the worst performance of any asset.

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