Google's Blowout Earnings; Investor Disconnect As Markets Struggle; #Etherium Taking Crypto By Storm

The earnings parade continues.

After the close on Tuesday, Alphabet (parent of Google, GOOG) released first quarter earnings which blew away Wall Street with stunning numbers, especially the EPS of $26.29, on expectations for $15.45. Revenue was $55.3 billion, also ahead of forecasts.

Google advertising revenue of $44.7 billion, rose 32.3% in the quarter, comprising 80.8% of companywide revenue.

Off numbers that were truly spectacular, the company is being rewarded by investors in the pre-market, with shares up by more than five percent (2,423.35 +116.23).

Meanwhile, with stocks set for an open in just over a half hour's time, futures are collapsing, with Dow futures off nearly 100 points. The S&P and NASDAQ futures are also trending lower.

There seems to be a disconnect between stocks and investors developing. Even though the main indices are at or near all-time highs, advancing further has been an issue over the past week to 1 days. As an illustration, the S&P made a new all-time closing high on April 16, finishing at 4,185.47. After failing to follow through for a week, it finally made its way to another record close on Monday, ending at 4,187.62, though the gain was a mere seven points. Tuesday's small dip kept it from setting another record.

The Dow has been trading in a very similar way, closing at record levels on April 5th, 8th, 15th and 16th, but the 30 industrials can't seem to find a way higher. Tuesday's session was the seventh straight in which it failed to make a new high at the close of the day.

Another issue facing markets - aside from stocks - is in the precious metals space. While god and silver have had some success over the past few sessions, they are still trading in the futures market at levels well below their August 2020 highs and were crushed again overnight. As of this writing, silver, which closed at $26.25 in New York, is trending at 25.82, down .43 cents.

Gold is down $11.10 from Tuesday's NewYork close, at 1,764.70. Resistance is substantial for $1800 gold and $26 silver.

Then there's Bitcoin and the universe of cryptocurrencies. Top performing Etherium has been the best crypto this year, outpacing even the grandaddy, Bitcoin. Just peaking above $2,700, ETH is up 58% in just the past month. It has taken most of the action away from Bitcoin and some of the other high-flying altcoins.

Bitcoin, however, has struggled. Since peaking at $64,899 on April 14, it fell to a low of $47,044 this past Sunday, April 25. It has recovered quite well over the past two days to a current level just above $55,000, but still far from the all-time high.

There just seems to be an uneasiness in all markets, as though everything is not as it appears and that something big is about to occur. There are many distortions, dislocations, and distractions in the world, from supply chain issues to congress and the presidency. Joe Biden will make a speech tonight at 9:00 pm ET to a joint session of congress (an unusual event) to unveil yet another massive spending program.

Well before that the FOMC of the Federal Reserve will issue a policy statement at 2:00 pm ET, followed by a press conference with Chairman Jerome Powell.

More earnings hitting the street as well today, so there are plenty of events to affect prices and trading.

Money Daily HQ is in the process of getting a new roof today. It's difficult to concentrate on anything as it sounds like a thunderstorm overhead, so this note is going to be cut short...

AT THE CLOSE, TUESDAY, APRIL 27, 2021:
Dow: 33,984.93, +3.36 (+0.01%)
NASDAQ: 14,090.22, -48.56 (-0.34%)
S&P 500: 4,186.72, -0.90 (-0.02%)
NYSE: 16,273.31, +32.10 (+0.20%)

Musk Tweets, Tesla Beats; JP Morgan's Jamie Dimon Green Light's Bitcoin; NASDAQ Closes At ATH

Since the early hours of April 14, when Bitcoin reached a new all-time high of $64,899, the price of the world's dominant cryptocurrency went into a protracted tailspin, dropping to $47,044 on Sunday, April 25, a decline of some 28 percent, prompting cries of "told 'ya so", "tulips" and "ponzi scheme" from the usual chorus of no-coin losers.

Prior to hitting what turned out to be a short-term bottom, however, Tesla CEO, Elon Musk sent forth a tweet, simply asking, "What does the future hodl?" which caught the attention of more than a few investors and acolytes, being that Musk is a Bitcoin believer, having committed $1.5 billion of his company's funds to the currency. "Hodl", a discrete misspelling by Musk in his tweet, is a commonly-used acronym popular among Bitcoin devotees, meaning “Hold On for Dear Life.” Thus, people who own and keep Bitcoin are known as hodlers.

Whether Musk was the actual catalyst, the price of Bitcoin began hurtling forward at a rapid pace Sunday evening, catapulting beyond $52,000 by midnight. But, that was only the beginning, because on Monday morning, none other than world-class Bitcoin basher, Jamie Dimon, CEO of JP Morgan Chase, announced that his bank would begin offering investments in Bitcoin to its wealthiest clients via an actively-traded fund by partnering with institutional investor NYDIG.

For JP Morgan's investment arm, the goal will be to offer high net worth individuals and institutions exposure to the world of cryptocurrencies without them actually having to own or acquire any of it. Dimon's early Monday morning missive sent Bitcoin higher still. By midday, it had climbed back over $54,000 and as of Tuesday morning has cruised past $55,000, considered by a score of Bitcoin analysts to be a critical pivot point.

Those who had - for the 489th time - decried Bitcoin's demise, seem presently to have been wrong again, as the cryptocurrency launched in 2009 continues to careen into the stratosphere. Did Musk know something about JP Morgan's imminent announcement when he tweeted or was he just lucky to get such favorable timing? We many never know, but his tweet and Dimon's announcement were certainly an opportune coincidence for anybody who BTFD (Bought the F***ing Dip).

Bitcoin followers note that on the way to "the moon", Bitcoin often experiences severe pullbacks such as this most recent one, but it's become well known that these instances of bearishness are common, normal, and healthy for the continued success of the crypto world. The instances of selloffs are usually short - lasting between seven and 15 days - and routinely severe, with declines of 15 to 30 percent. Weak hands get shaken out during these drawdowns, replaced by more serious, often institutional players who are less inclined to panic on short-term price volatility, giving Bitcoin a more solid base of support.

Where the price of Bitcoin will eventually head nobody really knows, but serious investors such as Max Keiser and Raoul Pal believe the price will eventually soar into six digits. For instance, Keiser has set a price target of $220,000 for "sometime in 2021." Other crypto champions offer similar predictions, many of them higher.

Also helping Bitcoin forge a path forward are comments made by legendary investor, Bill Miller, who spoke on CNBC last week, opining that Bitcoin isn't a bubble, and that this year's outstanding growth is a sign of it going mainstream and appealing to institutional investors. He points out that one of the main features of Bitcoin's rising price structure is simply a supply and demand issue. Bitcoin miners increase the stock by two percent a year, while demand for it is growing at a much faster pace, thus raising the price naturally.

Acceptance of Bitcoin by the institutional investor crowd, especially such high-profile statements by the likes of Miller, Musk and Dimon, ensures that the federal government will not crack down on cryptocurrencies as many have feared. Treasury Secretary Janet Yellen has commented repeatedly that Bitcoin and altcoins need to be regulated, but her office has not issued any new rules regarding cryptos. Any rules or restrictions Yellen may wish to put upon investors are being made much more difficult now that Wall Street is beating a hasty path to the crypto universe. The one thing she is certain NOT to do is upset the masters of the universe at the big banks and investment brokerages.

Elsewhere on Monday, stocks were mixed, with the Dow losing ground while the NASDAQ was playing catch-up to the rest of the major indices, joining the Dow, S&P, and NYSE Composite by setting a new closing all-time high at 14,138.78, surpassing the February 12 close of 14,095.47. The other indices have been setting records on a regular basis for the past few months, but now the averages are in lockstep, prompting the bulls to press forward.

Announcing after the closing bell, Tesla (TSLA) returned 93 cents in the first quarter, topping estimates of 79 cents per share on revenue of 10.39 billion. The stock fell in after-hours trading. As of Tuesday morning, shares were trending lower by just more than two percent. A decline in the share price of the electric car manufacturer would not be devastating to anyone who's been on the Tesla train for a while. The stock has been one of the best performers in the market since the start of the plandemic back in February 2020.

In March of 2020, the price of TSLA shares fell into double digits, bottoming out around $85. It has since skyrocketed as high as 883, a ten-bagger for bottom feeders. It's since pulled back, as have most of the big cap tech stocks, but is still elevated above 700. It closed Monday at 738.20. Nobody's crying over another solid quarter at Tesla.

Many more companies are reporting first quarter earnings Tuesday and the rest of the week. The Fed begins a FOMC meeting on Tuesday with a policy statement due out at 2:00 pm ET Wednesday.

AT THE CLOSE, MONDAY, APRIL 26,2021:
Dow: 33,981.57, -61.93 (-0.18%)
NASDAQ: 14,138.78, +121.98 (+0.87%)
S&P 500: 4,187.62, +7.45 (+0.18%)
NYSE: 16,241.21, +35.21 (+0.22%)

WEEKEND WRAP: Biden's Green Promise Is Full of Hot Air; Bitcoin Bombs, Bonds Flat, Silver On the Radar

One of the major stories from the week just past was the virtual global climate summit (via Zoom) in which Joe Biden made a commitment to drastically reduce greenhouse gas emissions by as much as 50% by the year 2030.

Biden's promise, just like everything else that comes out of this man's mouth, is ambiguous, inaccurate and misleading. It offered no significant plans - only objectives - on how this was going to be accomplished (hint: it won't be) other than the usual platitudes about more green jobs, a commitment to renewable energy, and reducing the use of fossil fuels. Like most political affairs, this one was full of hot air, suggesting that if politicians would, in the aggregate, shut up for a couple of years, the problem would be solved.

According to the White House "fact sheet" (honestly, it was difficult to find any "facts" at all, though there were plenty of promises and loads of political posturing), the target aims at 50-52 Percent Reduction in U.S. Greenhouse Gas Pollution from 2005 Levels in 2030. The key phrase missing from almost all news reports is highlighted (2005 levels).

In 2005, total gross U.S. greenhouse gas emissions were 7378.8 million metric tons of carbon dioxide equivalent
(MMT CO2 Eq).

In 2019 (latest data), total gross U.S. greenhouse gas emissions were 6,558.3 million metric tons of carbon dioxide equivalent
(MMT CO2 Eq).

Overall, net emissions decreased 13.0 percent from 2005 levels. So, Biden's team has a running start. To get to -50% from 2005, they need to lower emissions to 3,689.4 MMT CO2 Eq, which would be about a 43% reduction from the 2019 figures. Considering that 2020 was probably a net winner for the climate changers, since automobile traffic, factory output and many other greenhouse gas emitters were significantly lower because of all the lockdowns, restrictions, and stay-at-home mandates, the Biden administration's EPA will probably make some bogus claim about 2020 greenhouse gas reductions being down some seven to 13 percent from 2019. So, yes, more innuendo, ambiguity, misdirection and glad-handing all around to come.

But it's not all that simple. Here's an NOAA article claiming that despite pandemic shutdowns, carbon dioxide and methane surged in 2020, and carbon dioxide levels are now higher than at anytime in the past 3.6 million years.

However, the very same article links to another article which claims that the economic recession was estimated to have reduced carbon emissions by about 7 percent during 2020. So, let's follow the science, which is apparently leading in opposite directions. All this stuff makes one's head spin.

For some perspective, here's Joakim Book of the American Institute for Economic Research on Zero Hedge with a view of how journalists and media distort the facts and findings on climate change (and just about everything else). The Zero Hedge version is the same as the original, but with funny cartoons and a lively discussion section following.

There are a number of scenarios. By 2030, Biden will likely be dead and buried and all of his mouthpieces, spokespersons, aides, and entourage will have moved on to other things, so nobody working at the White House today will have any accountability issues. Even if greenhouse gas emissions are reduced by 10% or 15%, which could happen either due to population reduction (don't laugh, it's a thing!) or "green" measures, that's going to be enough for Democrats to call it a win, as in, "well, we're close, we tried." Like Obamacare, the upfront lies - "if you like your doctor, you can keep your doctor" - will largely be overlooked down the road.

Advice to anybody worried about any of this: punt. It's not worth anybody's time or effort to get excited, depressed, or concerned about this or any other program coming out of the bogus white house and fake media. Remember, these are government programs. They're destined to fail or fall far short of their stated goals. Besides, there's a vested interest by researchers to conclude that global warming or climate change is really a problem, because their funding and livelihoods depend upon it, so the findings are subject to goal-seeking erros and mass delusions. We were supposed to be underwater by now. We're not. And if the world is supposedly getting hotter every day, how come the US had a major snowstorm in April?

Not to put to fine a point on it, the sudden resurrection of the climate change argument is more about politics and money than actual scientific data.

If you're interested, there's plenty of data. The links below offer a good place to start reading up on the government’s version of climate change. Warning: may cause nausea to conservatives, scientists, or anybody over the age of 60.

Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2019

Executive Summary [PDF]

In the financial world, it was a great week to be a trader or broker because stocks were flipping from red to green faster than pancakes at Waffle House. Headlines and algos produced a week of three down days and two to the upside. The losses on Monday, Tuesday, and Thursday were offset by bounce-back gains Wednesday and Friday. Investors were thankful for rebounding trades but likely miffed over the losses, especially Thursday's, when the market suddenly slammed into reverse on rumors of a 39.5% capital gains tax suggestion coming from the Biden administration.

As it turns out, this particular FUD attack was put in play by Bloomberg, always acting at the behest of the Fed and other financial handlers. Because the proposed near-doubling of the capital gains tax turned out to be something Biden's team proposed months ago, the cynical view was that insiders on Capitol Hill and elsewhere made bank on the algo-moving story, shorting all the way down and buying back in on the way back up the following day.

That the losses Thursday were overcome by gains on Friday in all of the indices except the Dow Industrials speaks to the anguish over controlled markets and the pack of transparency caused by algorithms, front-running, spoofing, and massive dark pools operated by the largest brokerages and trading houses.

In the end, stocks and those who invest in them suffered what amounted to a flesh wounds. Small caps on the NYSE actually ended up slightly on the positive side for the week even though the roller coaster ride may have been unsettling along the way.

AT THE CLOSE, THURSDAY, APRIL 22, 2021:
Dow: 33,815.90, -321.41 (-0.94%)
NASDAQ: 13,818.41, -131.81 (-0.94%)
S&P 500: 4,134.98, -38.44 (-0.92%)
NYSE: 16,030.62, -90.99 (-0.56%)

AT THE CLOSE, FRIDAY, APRIL 23, 2021:
Dow: 34,043.49, +227.59 (+0.67%)
NASDAQ: 14,016.81, +198.39 (+1.44%)
S&P 500: 4,180.17, +45.19 (+1.09%)
NYSE: 16,206.00, +175.38 (+1.09%)

FOR THE WEEK:
Dow: -157.18 (-0.46%)
NASDAQ: -35.53 (-0.25%)
S&P 500: -5.30 (-0.13%)
NYSE: +19.71 (+0.12%)

While stocks were getting bumped and pushed higher and lower, fixed income flat-lined. At the long end of the treasury complex, yield on the 30-year bond round-tripped a whole five basis points, finishing the week one bip lower than the prior Friday, at 2.25%. The 10-year note yield was similar, with a four basis point range resulting in a loss of one basis point, to 1.58%. Bills of one to six months duration were pressed as low as possible, with the 30-day bill yielding 0.1%, the six-month, 0.3%.

From all appearances, the Fed has been able to exert some manner of yield curve control on agency-issued debt, sparking a rally in the long-dated maturities off the scary high yields from a month ago. In mid to late March, the 30-year yield was as high as 2.45%, the 10-year pumped as high as 1.74%. Jawboning the inflation fright out of bonds was child's play for Fed officials. All they had to do was convince the entire planet that those inflationary signals coming from the commodity space (especially lumber and base metals) and grocery prices (think ground beef at $4.95 a pound and up, plus "shrink-flation" in packaged consumables) were either transitory or temporary, two words which are like a magic potion in the world of central bank counterfeiting.

Now that the Fed has proven capable of keeping the lid on bond yields, thanks to a lapse in government hand-outs (no new stimulus proposals, yet) and some slight apparent return to almost normal conditions in the real world, in some places, in a fragmented, localized manner, bonds can continue on their path to zero-boundness or the passé euro-branded negative rate structure. In sympathy, the dollar came under pressure against most other fiats as the planet winds down the currency debasement road to monetary hell.

In keeping with the no-inflation containment theme, oil prices were wrangled down over the past seven days, with WTI crude dropping from $63.13 a barrel to as low as $61.35, finishing up Friday at $62.14, down just over a buck for the week. There was little to no further pain at the pump. In the United States, drivers don't appear to be concerned with fuel prices hovering around a national average of $2.89 a gallon, even though it is the highest in more than a year and up by more than a dollar from this time a year ago.

The matter falls to the cost of extraction across the universe of drillers and riggers. At $60+ a barrel, even most shale drillers can turn a profit, putting the current price somewhere in "Goldilocks" territory, not too high, nor too low, but just right. Unless there's a sudden demand spike - which could be manufactured due to pent-up vacation demand by locked down US citizens - the current range just above $60 may persist into the summer driving season, though the potential for profit-driven price hikes cannot be ruled out in the current context of mass control.

While stocks, bonds, and crude oil were forging a bridge to an unchanged shoreline, the case in cryptocurrencies was more panic-stricken, as Bitcoin continued to tumble off new highs made just days prior. It was April 14 when Bitcoin priced at a record high of $64,899. Since then the world's original crypto has fallen off a proverbial cyber-cliff, bending to a low of $47,464 as of Friday night (4/23).

There have been two major drawdowns over the past ten days for Bitcoin, both occurring, for whatever reason, on, or close to, the weekends. The first, which saw the price plummet from $60,000 to $53,000 in hours, happened over last Saturday night (4/17) into Sunday morning (4.18). The latest fallout - from $54,860 to $47,464 - was this past Thursday into Friday.

If this becomes a trend, a drop from around $48,000 to somewhere in a range of $41,000 to $42,000 could be in the offing. For now, Bitcoin is holding in a range between $48,000 and $51,000 over the past 24 hours. Directionally, the trend is lower, which shouldn't come as a surprise. Moves of 18% to 30% in a tight time frame are not unusual in the crypto space. Putting the recent pullback into perspective, six months ago - October, 2020 - Bitcoin was trending in a range between $11,000 and $13,000. The rise to the recent high was a 500-600% move. Some profits are being taken, not unexpectedly.

Precious metals found midweek upside by Wednesday only to be squelched by a wicked selloff Thursday and Friday. Gold ended the prior week (4/16) at $1782.50, moved as high as $1793.90, only to close out the week in the red, at $1,778.18. Silver was also bounced around, starting from Sunday's price of $25.97 the troy ounce to as high as $26.55 on Wednesday, only to be slammed to a loss at $25.57 by week's end.

The continuing sideways to lower pricing in the futures market of gold and silver has prompted a call to arms by Sprott Money's Craig Hemke, who penned a note on the site's blog, aligning himself with the reddit group r/WallStreetSilver, which has been in the process of trying to squeeze the COMEX and LBMA of their existing stocks of 1000-ounce bars stored mostly in London vaults.

Hemke's post, "A Time To Fight Back", appeared on Tuesday, April 20, and caught the attention of many in the precious metals community. In it, he makes an impassioned plea to the redditers and others to purchase 100 ounces of physical silver on May 1, ten years to the date of the near-fatal cramdown in silver that kicked off a nearly decade-long bear market.

As well-intentioned as Hemke's proposal may have been, there are two major points of contention in his plan. First, the reddit crowd and other silver stackers have never stopped buying physical silver since the first raid back in February. Second, May 1 is a Saturday. In addition to it being the date for the annual "Run for the Roses" Kentucky Derby, the futures markets are closed. Thus any mass buying spree on that day would give the LBMA and COMEX all day Sunday to plot any counter attack, should one even be appropriate.

Perhaps, Hemke might have chosen not to let his emotions rule his thinking by timing the assault to the day of a prior massacre, but spread the buying out over time. Perhaps the late week drawdown in silver - and gold - was a reaction or warning shot by the bullion banks. They're not accustomed to being challenged on social media or elsewhere and they can fight dirty. That's well known. Whatever the case, the battle has been re-engaged and this coming week may be one for the History Channel.

Closing out the WEEKEND WRAP, here are the most recent prices for common gold and silver items purchased on eBay (numismatics excluded, shipping - often free - included):

Item: Low / High / Average / Median
1 oz silver coin: 33.29 / 49.95 / 41.41 / 41.45
1 oz silver bar: 35.00 / 53.49 / 42.79 / 40.50
1 oz gold coin: 1,904.15 / 2,155.77 / 1,981.67 / 1,977.96
1 oz gold bar: 1,854.25 / 1,885.49 / 1,873.05 / 1,872.20

The key takeaways from this week's survey are that sales are brisk, many non-numismatic one ounce gold coins have come out of hiding and are fetching exceptionally good prices, the average premium more than $100 higher than one ounce gold bars, whose prices are routinely uniform, in a $31 range, whereas gold coins are spread out over a $250 range. It's more than apparent that gold coins are more highly valued to investors than similarly-weighted bars. Prices for coins are higher this week than at any time back to February. The average and median prices for gold bars was down slightly from the prior week.

Silver held up well, despite the drop on the COMEX leading into the weekend. The Single Ounce Silver Market Price Benchmark (SOSMPB) did suffer a loss, dropping from $42.99 down to $41.54. The benchmark remains above $40 a troy ounce for the 12th consecutive week.

A final word: Many listed companies report earnings this week. Among the big names putting out first quarter results are Tesla (TSLA), General Electric (GE), AMD (AMD), Alphabet (GOOG), Microsoft (MSFT), Visa (V), 3M (MMM), Boeing (BA), Yum Brands (YUM), eBay (EBAY), Facebook (FB), Apple (AAPL), Caterpillar (CAT), McDonald's (MCD), Amazon (AMZN), Merck (MRK), Twitter (TWTR), ExxonMobil (XOM), Chevron (CVX), and AstraZeneca (AZN).

There's also a meeting of the FOMC of the Federal Reserve, Tuesday and Wednesday, with a press conference following the policy rate decision after 2:00 pm ET, Wednesday.

OK, that's it. Have a good week, everybody.

AT THE CLOSE, FRIDAY, APRIL 23, 2021:
Dow: 34,043.49, +227.59 (+0.67%)
NASDAQ: 14,016.81, +198.39 (+1.44%)
S&P 500: 4,180.17, +45.19 (+1.09%)
NYSE: 16,206.00, +175.38 (+1.09%)

FOR THE WEEK:
Dow: -157.18 (-0.46%)
NASDAQ: -35.53 (-0.25%)
S&P 500: -5.30 (-0.13%)
NYSE: +19.71 (+0.12%)

Biden Tax Proposals Shake Markets; Stocks, Cryptos, Precious Metals All Suffer Losses

Anybody with a solid understanding of Democrat politics saw this coming.

By the time Joe Biden was inaugurated on January 20, there were already whispers of tax increases on the way from Democrats controlling the House and Senate. On Thursday, Joe Biden's team - via leaked advance information to Bloomberg (the usual suspect) - crushed markets when it was revealed that Biden's administration would seek to raise capital gains taxes as high as 39.5 percent, nearly doubling from the current 20 percent.

There's also information circulating that Biden will propose raising the top income tax rate to 43.4% from the current 39.6%.

The news sent not just stocks, but precious metals and cryptocurrencies tumbling. The Dow Jones Industrials, which were down just 10 to 20 points as of 1:00 pm ET, fell off a cliff, dropping 240 points in a matter of minutes as the report from "anonymous sources" hit the news wires. It only got worse from there, sending the Dow to its third loss this week. Wednesday's gain was nearly equal to the losses on Thursday.

The same was happening over at the NASDAQ, S&P, and NYSE, which all suffered damaging, though not fatal losses. Other markets were also affected negatively. Gold finished down nearly $10 on the day, closing out the NY session at $1783.90. Silver lost 44 cents, finishing at $26.11.

The crypto market was stunned, as Bitcoin fell below $50,000 for the first time since early March, hitting a low overnight at $47,464. Most altcoins, including Etherium, also suffered losses in the range of seven to 20 percent.

As markets prepare to close out the week Friday morning, stock futures are barely clinging to gains, although Dow futures are already in the red as of 8:15 am ET. Bitcoin has recovered to just above $50,000, but gold and silver are both up sharply.

International markets were affected, though Asian markets appear to have shrugged off the damage on US stocks. European stocks are mostly lower in Friday's trading.

The news that tax hikes are on the way sent a serious message to investors, though the timing and the fact that the reporting is still unsourced speaks to a little gamesmanship in the inner circles of finance. Stunning markets in such a manner is one way to shake out weak hands and, if that was the intention, it worked like a charm.

It remains to be seen whether the Biden team's plans will come to fruition, as most, if not all, senators are primarily funded by wealthy individuals and corporate donors. It would be working against the interests of the entire Senate should these massive tax hikes become reality.

Of course, any tax increases would not take effect until next year, when returns for 2021 would come due. This is a test for markets and investors to see if the market has finally topped out or whether it can recover and move on to new highs.

Thank your Democrat oligarchs for putting a melancholy edge to the end of the week.

AT THE CLOSE, THURSDAY, APRIL 22, 2021:
Dow: 33,815.90, -321.41 (-0.94%)
NASDAQ: 13,818.41, -131.81 (-0.94%)
S&P 500: 4,134.98, -38.44 (-0.92%)
NYSE: 16,030.62, -90.99 (-0.56%)

Bitcoin Suffers Declines as Hodlers Seek Policy Guidance from Entrenched US Government

Bitcoin and cryptocurrencies in general have been under some price pressure in recent days. This article looks to explore some of the possible reasons for the recent weakness and attempt to look beyond the FUD and examine some of the elements contributing to the ongoing crypto debate both inside and outside the government.

As recently as last week, Bitcoin soared to new highs after Coinbase, the leading crypto exchange, went public, listed on the NASDAQ as COIN. Shortly thereafter, on late Saturday, April 17, and into early Sunday morning, Bitcoin tumbled from $60,900 all the way down to $53,371, mostly on rumors and a power outage in the Chinese province of Xinjiang, home to many Bitcoin miners.

The power outage was probably more the issue than anything else, as the hash rate (speed at which Bitcoin is mined) fell precipitously, and took price, which correlates well to hash rate, down with it. The outage has since been fixed and Bitcoin's price has recovered somewhat, but it has continued to languish between $53,000 and $57,000 this week.

On Wednesday, the House of Representatives passed the Eliminate Barriers to Innovation Act, creating a joint working group between the Securities & Exchange Commission (SEC) and the Commodity & Futures Trading Commission (CFTC). Representatives from FinTech companies, financial firms, academic researchers, and investor watchdogs would also be invited to participate.

Within 90 days of passage into law, the working group would have one year to analyze the country’s current laws and regulations which affect digital assets. The legislation now heads to the Senate.

Meanwhile, according to Fox Business' Charlie Gasparino, the Biden administration is working towards a regulatory framework for cryptos via the Treasury Department headed by Janet Yellen. His sources tell him that Treasury is developing an overll approach to crypto regulation, which will give Gensler, the newly-appointed head of the SEC, guidance on specific rules and regulations. It's a very touchy issue and one that has some crypto investors worried.

Gasparino does not believe that the government would ban cryptocurrencies, but that regulations to track investments and reporting requirements will be forthcoming, possibly in a little as a month.

With so much attention focused on crypto at the highest levels of government, there's ample reason to be skeptical for the future of Bitcoin, Etherium, and other cryptocurrencies, altcoins, and decentralized finance (DeFi) as a whole. The US government is beholden to the central bank, the Federal Reserve, and their currency of choice is, of course, Federal Reserve Notes. Crypto poses a threat to the financial system, which is already facing serious headwinds from other fiat currencies. The US dollar has lost nearly all of its purchasing power and inflation is furthering its decline, another reason many investors and individuals are flocking to crypto and alternatives like gold and silver.

At issue is how the United States, European Union (EU), and other countries such as Canada, Great Britain, Australia, Russia, and China will deal with a novel currency which competes with their own favored fiats. It would not be beyond the pale to suggest that the G7 or G20, in cahoots with the World Bank and IMF to at some point outlaw cryptocurrencies or at least regulate them to the point at which they become useless.

Thus, there is nervousness among hodlers, though the widespread use and adoption of cryptocurrencies by major financial firms has so far kept governments at arm's length. For now, cryptocurrencies have been embraced by the likes of PayPal and their app, Venmo, Square, and other FinTech interests. Others, such as Elon Musk, CEO of Tesla, have made significant investments in Bitcoin, and, supposedly, other cryptos.

Because of the business angle, Gasparino is probably right. Government is unlikely to overreach and ban Bitcoin and others outright. The crypto universe is already worth more than $2 trillion and growing. There might be significant backlash if the government was seen to be overstepping its bounds. Skeptics argue that after the plandemic, lockdowns and mask mandates, the federal government is willing to stop at nothing to protect its self-interests. Individual states may have opinions of their own.

The situation is fluid, filled with suspense and moving parts. Upon the fate of Bitcoin may hinge the future of freedom and liberty in the United States and around the world. Nothing gets people's juices flowing like money and the government's handling of it, which, to date, has not been a stellar track record. In the background is the potential of FedCoin, the Federal Reserve's own digital currency (CBDC), which is reportedly in development, but likely still years away from implementation. It will take a wholesale collapse in financial markets to usher in a CBDC, but, unless you've been living under a rock, the potential for catastrophe has been a constant backgrounder ever since the GFC of 2008-09.

Already on the radar of governments around the globe, Bitcoin's revolutionary approach to currency is and will continue to be a bone of contention. Anonymity, which was initially a strength of the world's first cryptocurrency has been challenged and quite possibly already defeated. The IRS already has a checkbox on Income Tax Form 1040 asking whether or not the filer has engaged in cryptocurrency buying and/or selling. That's a major intrusion to privacy and threat to anonymity, as not telling the truth to the IRS can be costly as well as criminal.

This story has an ending, somewhere down the line, but, from all appearances, we're nowhere close to it.

A couple of final thoughts: with Bitcoin experiencing outflows, where did all that money go? Some of it may have gone into gold and silver, both of which have been gaining over recent days, with silver topping out over $26.50 on Wednesday and gold closing in on $1800.

As far as stocks are concerned, CNBC recently reported that the $569 billion invested in global equity from November 2020 to the present is more than all of the investment inflows from 2009 to 2020, $452 billion, proving somewhat definitively, that most of the stock market gains following the GFC were fueled primarily by the Fed and stock buybacks.

Wednesday, stocks were up across the board, with the Dow, S&P, and NYSE closing shy of their all-time highs. The NASDAQ continues to peek at it's Feb. 12 all-time high (14,095.12). It sits just 150 points short of that mark.

Unearthed is this video from March 1 with a mere 960 views which offers some insight to what Gary Gensler, the newly-confirmed head of the SEC, may do concerning Bitcoin and all cryptocurrencies. Gensler is supposedly pro-crypto, having taught classes related to cryptocurrencies at MIT. On the other hand, he was also head of the CFTC, which has a long-standing history of suppressing the price of precious metals, which may lead one to believe he may not be so friendly towards crypto.

This video from altcoin daily explains in some detail the cause of the recent Bitcoin mini-crash which, expectedly, morphed over to affect the entire crypto universe.

AT THE CLOSE, WEDNESDAY, APRIL 21, 2021:
Dow: 34,137.31, +316.01 (+0.93%)
NASDAQ: 13,950.22, +163.95 (+1.19%)
S&P 500: 4,173.42, +38.48 (+0.93%)
NYSE: 16,121.61, +177.00 (+1.11%)