Crypto-associated stocks were hammered this week as the price of bitcoin crashed to a record low and alternative coins like HOOD and COIN plummeted 40 percent on CoinMarketCap. What’s causing this drop, where does it go from here?
The “riot blockchain” is a cryptocurrency associated with the crypto market. It was created to provide users with a decentralized platform to create and use their own cryptocurrency. The price of the coin fell to an all-time low of $0.03 on September 14, 2018.
The sudden collapse of the Terra ecosystem was the most juicy nugget of gold in the crypto media today. Listed companies with exposure to blockchain startups and cryptocurrency mining have also fallen dramatically, alongside the stock market slump.
Bitcoin mining stocks are still losing money…
Most bitcoin mining stocks have fared worse than bitcoin by a large margin, leaving mining investors wishing they had just bought bitcoin in early 2022 instead. pic.twitter.com/anSoUEoUJ1
May 11, 2022 — Jaran Mellerud (@JMellerud)
While it may be tempting to pinpoint the recent decline to Terra’s collapse, the fact is that the price of Bitcoin mining stocks has generally followed BTC’s performance since its peak in November 2020.
RIOT, HUT, MARA and BITF vs. BTC/USDT 1-Day Chart TradingView (source)
As long as Bitcoin continues to bleed down despite many headwinds such as rising interest rates, inflation and global warfare, the price of these stocks will likely suffer.
Financial services that use cryptocurrency are also correct.
It’s not just Bitcoin mining stocks that have been under pressure recently; in May, all kinds of businesses associated with cryptocurrencies felt the heat.
Coinbase (COIN) shares hit an all-time low of $41.23 in early trading hours on May 12, after the company released forward-looking comments predicting an ongoing decline in active users and trading volume.
4-hour chart of the COIN price. TradingView (source)
On May 12, Robinhood’s stock price plunged to a new low of $7.73, a day after the company announced its first-quarter crypto transaction revenues were down 39% year-over-year, from $88 million in 2021 to $4 billion. 54 million in 2022.
While Robinhood is not just a crypto exchange, crypto-related transactions accounted for about 18 percent of net income in the first quarter, which is significant compared to the other markets transacted on the site.
Regulatory fears and Terra’s UST crash hit bitcoin hard, causing it to struggle to hold on to $29K.
The IT industry is going through a recession.
The declines in cryptocurrency-related stocks reflect broader market weakness, particularly in the technology sector.
Several years of rosy forecasting and quantitative easing has resulted in an expensive and volatile technology industry that screams when results fall short of expectations.
Once the darlings of the major stock market, FAANG companies have led the downward march by bringing down the Nasdaq, which ended April with its worst monthly performance since the 2008 financial crisis.
One day chart of the NASDAQ composite. TradingView (source)
The Nasdaq’s losses accelerated in May, with the benchmark index falling 9.15 percent to its lowest level since November 2020.
The thoughts and opinions of the author are entirely his or her own and do not necessarily reflect those of Cointelegraph.com. Every investment and trading choice has risks, so do your homework before making a decision.
The “Stocks and Cryptocurrency to Watch” is a list of stocks linked to cryptocurrency. These stocks have been hammered as the price of bitcoin, which has fallen to record lows, continues to fall.
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