Crypto-associated stocks hammered as COIN and HOOD drop to record lows
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 by 40 percent on CoinMarketCap. What is causing this drop, where does it go from here?
The “riot blockchain” is a cryptocurrency that has been associated with the crypto-market. It was created to provide a decentralized platform for users to create and run their own cryptocurrency. The coin’s price dropped to an all time low of $0.03 on September 14, 2018.
The sudden collapse of the Terra ecosystem was today’s most juicy nugget in the crypto media. Listed firms with exposure to blockchain startups and cryptocurrency mining have also fallen dramatically, in addition to the equity market’s slump.
Bitcoin mining stocks are still losing money…
Most bitcoin mining equities have underperformed bitcoin by a large margin, making mining investors wish they had just purchased bitcoin instead at the start of 2022. pic.twitter.com/anSoUEoUJ1
May 11, 2022 — Jaran Mellerud (@JMellerud)
While it’s tempting to pin the recent drop on Terra’s collapse, the fact is that the price of Bitcoin mining stocks has generally tracked the performance of BTC since its high in November 2020.
RIOT, HUT, MARA, and BITF vs. BTC/USDT 1 day graph TradingView (source)
As long as Bitcoin continues to hemorrhage downward in the face of many headwinds, such as increasing interest rates, inflation, and global warfare, the price of these equities is likely to suffer.
Financial services using cryptocurrency are also correct.
It’s not only Bitcoin mining stocks that have been under pressure recently; in May, all kinds of firms with any type of ties to cryptocurrencies have been feeling the heat.
Coinbase (COIN) shares reached an all-time low of $41.23 in early trading hours on May 12 after the company released forward-looking remarks predicting a sustained fall 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 all-time low of $7.73, one day after the company announced that their crypto transaction revenue in Q1 decreased by 39% year over year, from $88 million in 2021 to $54 million in 2022.
While Robinhood is not a crypto-only exchange, crypto-related transactions accounted for around 18 percent of its Q1 net income, which is considerable when compared to the other markets handled on the site.
Fear of regulation and Terra’s UST crash struck bitcoin hard, causing it to struggle to retain $29K.
The IT industry is experiencing a downturn.
The drops in cryptocurrency-related equities reflect broader market weakness, particularly in the technology sector.
Several years of rosy forecasts and quantitative easing have resulted in an expensive and volatile tech industry that screams when results fall short of expectations.
FAANG firms, which were once the darlings of the great stock market, have led the march downward, pulling down the Nasdaq, which finished April with its worst monthly performance since the financial crisis of 2008.
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.
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The “stocks and crypto to watch” is a list of stocks that are associated with cryptocurrency. These stocks have been hammered as the price of bitcoin, which has dropped to record lows, continues to fall.