🫧 Crypto, untethered

…and America’s baby-formula shortage [Disclosures](   Chaos in cryptoland (Justin Tallis/AFP via Getty Images)   Yesterday’s Market Moves   Dow Jones 31,730 (-0.33%) S&P 500 3,930 (-0.13%) Nasdaq 11,370 (+0.06%) Bitcoin $28,276 (-2.46%) Dow Jones 31,730 (-0.33%) S&P 500 3,930 (-0.13%) Nasdaq 11,370 (+0.06%) Bitcoin $28,276 (-2.46%) Hey Snackers, Happy Friday the 13th, the most [feared]( day of the year. Even the markets may get a little extra spooked today: stocks usually [dip]( on Friday the 13th since people invest, travel, buy, and work less. Stocks [closed mixed]( yesterday, with the S&P getting closer to bear-market territory (down 18% this year). Major cryptocurrencies [continued to fall]( as investors weighed concerns about more stablecoins “unpegging.” About that… Untethered As crypto prices crash, the lawless market could be in for a regulatory reckoning It could be contagious… Crypto markets have caught a cold — or worse. The crypto industry has lost nearly $500B this week after two top stablecoins were “[unpegged]( — and caused investors to panic-sell other coins. Refresher: stablecoins are cryptos whose value is (theoretically) pegged to other assets, like the USD. A recap: - First, stablecoin TerraUSD (UST) [fell]( to a third of its “fixed” value after its algorithm failed to rebalance its price (it’s still [down](. - Then the largest stablecoin, Tether, [slipped]( from its $1 peg, falling to $0.95 before recovering. (Tether is backed by cash, not just an algorithm.) Skittish investors have been selling off the bigger coins this week too: [bitcoin’s]( down 22%, [ether]( 31%, and [solana]( 49%. This could be a (decentralized) bubble… When an entire asset class (think: real estate, stocks) is overvalued, it’s often called a “bubble” — and if prices later crash, the bubble bursts. Some experts say crypto’s sell-off is starting to [resemble]( the dot-com bubble that led to the 2000 tech crash, or the housing bubble that led to the Great Recession (2007-09). In both cases, a sharp panic-fueled sell-off followed years of soaring speculative prices. (Worth noting: both those crashes wiped out trillions in wealth, much more than the crypto sell-off has.) THE TAKEAWAY Bursting bubbles are destructive… but they can be beneficial. If a crypto bubble pops, coins could disappear, companies could go bankrupt, and investors could lose billions. Yet more consumer protections, stronger regulations, and leaner companies could also emerge ([Google]( and [Amazon]( vaulted to global dominance after dot-com-era consolidation). That was what crypto-supporting Sen. Pat Toomey meant this week when he said that “failure should be an option” in the crypto space. Bottle America’s baby-formula shortage exposes the risks of US-first trade policies and strict regulation Endless “sold out” shelves… not again. A baby-formula crisis is rippling through the US, forcing parents to [ration]( supplies or drive hours in search of inventory. Over 40% of formula is out of stock nationwide, up 10% from a month ago. Now top formula supplier [Abbott Labs]( says it could take until July to get the product back on shelves. How we got here: - In February: The FDA [recalled]( formula brands made at Abbott's Michigan plant after reports that some babies had gotten sick — and even died — from bacterial illnesses traced to the facility. As a result the plant was shut down. - This week: Abbott got the OK to [resume]( production in that plant, but only on a case-by-case basis (think: specialty formulas for medical conditions). Pandemic stockpiles… The plant closure is just part of the story. Worried parents snatched up formula in droves in the early days of Covid. As they worked through their supplies, demand plummeted and formula makers slashed production. Inventory still hasn’t kept up with a resurgence in demand (#supplychain, #laborshortages). Now retailers [from]( [Target]( to [CVS]( are capping how much formula shoppers can buy. On top of that: - Regulators are very strict about what goes in formula, and often only US-based ingredients make the cut. Global suppliers that do qualify [face]( a nearly 20% tariff. - The result is a tiny domestic industry of formula makers dominated by a handful of companies, like Abbott. THE TAKEAWAY This isn’t just a production issue… it’s a policy issue. The pandemic caused both the Trump and the Biden administrations to emphasize domestic manufacturing (aka: on-shoring). But the worsening formula shortage illustrates the pitfalls of limiting imports of basic necessities. Washington appears to be listening: the White House [said]( yesterday it’s working to reduce red tape and make it easier to import formula. What else we're Snackin' - [Jet]( If you haven’t booked your summer vacay, get on it: airfares rose 19% between March and April. Experts say the old trick of waiting for prices to drop is unlikely to work given the high demand for seats. - [Checkout]( Instacart is moving forward with plans to go public — details TBD — despite the carnage in tech stocks. The grocery-delivery app recently cut its valuation by nearly 40% because of the market turmoil. - [Desk]( [WeWork]( reported a quarterly loss that was better than expected, thanks to workers slowly returning to its coworking spaces (also: lots of cost cutting). The company lost $435M, compared to $2B a year ago. - [RT]( Two top execs have left [Twitter]( and the company said it would freeze most hiring ahead of Elon Musk’s takeover. Shares are trading nearly $10 below Elon’s bid, which could suggest investors think the deal could still fall apart. - [Dethroned]( A sign of the changing market: [Apple]( lost its spot as the world’s most valuable company to Saudi oil giant Aramco, which barreled ahead of the Fruit on the back of sky-high crude prices. 🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up [here](. Snack Fact Of the Day The average American adult has a net worth of $79,952 [Read more]( Friday - Earnings expected from Honda Motor Co., Sumitomo Mitsui Financial Group, Mizuho Financial Group Authors of this Snacks own: bitcoin, ethereum, and shares of CVS, Amazon, Twitter, Apple, and Google ID: 2200646 Robinhood Snacks newsletters reflect the opinions of only the authors who are associated persons of Robinhood Financial LLC (Member [SIPC]( and do not reflect the views of Robinhood Markets, Inc. or any of its subsidiaries or affiliates. They are for informational purposes only, and are not a recommendation of an investment strategy or to buy or sell any security, digital asset (cryptocurrency, etc) in any account. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided therein does not reflect the views of Robinhood Markets, Inc., Robinhood Financial LLC, or any of their subsidiaries or affiliates. All investments involve risk including the loss of principal and past performance does not guarantee future results. [Robinhood Terms and Conditions]( • [Disclosure Library]( • [Our Editorial Principles]( • [Contact Us]( • [FAQ]( [Manage Your Subscription Preferences](