The financial markets were ablaze this week with high volatility in cannabis shares unseating cryptocurrency as the trade of choice. References to cannabis in news articles were almost double that of cryptocurrency. But big falls on Friday, coupled with almost unilateral gains across crypto, showed how schizophrenic the weed market can be.
Tilray. When Lambo?
Tilray was the name on everyone’s lips this week. On Tuesday the Canadian company announced DEA approval to export a cannabinoid study drug into the US for clinical tests. TLRY stock jumped from around $120 to almost $300, as it saw $15 billion in volume from Monday to Thursday.
The price spurt intensified because the market cap for the company was just $16.4 billion at end of trading. On top of this, a single private equity fund controls over 70% of the shares, further reducing the available stock. The entire market cap of cannabis shares is around $35 billion, so investors were chasing each other around a very small market.
Live Fast, Die Young… in a Nice Pair of Shorts
Celebrated Bitcoin bull, Mike Novogratz, wanted a piece of that action, so managed to “get a borrow, short it for a day trade, make some money”. He believes that longer term, the marijuana industry has a promising future, but for now, it is all about short-selling.
He explained:
Listen, the weed business has a great underlying story, a lot like cryptocurrency. In five or six years, we will have a monster weed business.
Sure enough, price drops across Thursday and Friday saw Tilray close the week at around the same point it started it.
More Than a Ripple in the Crypto waters
The second half of the week saw a rally across virtually the entire crypto market, with Ripple a stand-out performer. Similar to the way sports betting apps have surged in popularity by offering fast-paced, high-reward opportunities, cryptocurrencies like Ripple are capturing traders’ attention with their quick and dramatic movements. At one point it unseated Ethereum [coin_price coin=ethereum] as the second largest currency by market cap, although that position has since reversed.
There are some who question Ripple’s surge [coin_price coin=ripple], including Yahoo Sports, who compare its position to that of Tilray, midweek. Sadly, the hosted video doesn’t seem to match the headline, so we are left in the dark as to why Yahoo make that comparison.
Guess we will just have to wait and see.
Are cannabis stocks behaving similarly to the cryptocurrency market right now? Share your thoughts below!
Images courtesy of Shutterstock, Tradingview.com
