Crypto cannabis, the bubble has popped
Crypto cannabis, the bubble has popped

Crypto cannabis, the bubble has popped

By Fabio Lugano - 29 Sep 2018

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The US and Canada have been hit by a real investment frenzy in the cannabis sector after the legalization in June.

The shares related to the sector have experienced a real and fast boom and bust cycle, leading to really impressive gains, but also losses.

To better explain this trend we can take as an example two companies in the sector, Tilray and Cronos, and analyze the trend of the stock value.

Here is the first on a monthly basis:

crypto cannabis

Then the second, on a six-monthly basis:

crypto cannabis

The charts show the bubble growing and then bursting, in the wake of the very high expectations arising from Canada’s legalization, the second country in the world to make this choice after Uruguay.

The cannabis sector has long been looking into cryptocurrencies both as a means of financing and as a legitimate means of payment in a confused situation such as that of the US where federal legislation has not yet legitimized the sector.

According to an analysis carried out by Cryptoslate, there are 31 tokens linked to the sector, many of which have not even reached the exchanges.

Of these, only 14 are actively listed and are: GreenMed, BudBo, BlazerCoin, SativaCoin, Smoke, KushCoin, Cannation, Marijuanacoin, CannaCoin, HempCoin, Paragon, Growers International, CannabisCoin, Tokes, DopeCoin, and PotCoin, but none of these projects currently exceeds 7 million capitalization, with the largest, HempCoin and PotCoin fluctuating between 6 and 7 million.

The exchange volumes are minimal and this is also a sign of the scarce use as a payment system: to give an idea, Potcoin trades 22 thousand dollars a day, while HempCoin 8500 and Tokes only 1500 (data from Coinmarketcap).

All these projects have undergone a Boom and Bust trend similar to the other cryptocurrencies, with an overvaluation in January followed by a strongly declining trend that, unlike other projects, has not had any change in recent months.

The end of the bubble of the legal cannabis companies seems to have influenced negatively the trading of cannabis-related cryptocurrencies as well.

Fabio Lugano

Graduated with honors from Bocconi University, Fabio is a consultant for companies and wounded shareholders of the Banche Venete. He is also the author of "Scenari Economici", and lecturer and analyst of cryptocurrencies since 2016.

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