The price of Bitcoin has tumbled this month and currently sits below $20,000, driven lower by inflation concerns and signs of bigger cracks in the crypto ecosystem. A number of Bitcoin stocks — or companies that have business tied to the cryptocurrency — are living in the basement as well.
None of the stocks mentioned here are currently in bases. Ratings for many are currently weak.
Bitcoin's gyrations have arrived as traders try to figure out where the economy is headed, as the Federal Reserve raises its key interest rate to head off rising consumer prices.
Bitcoin has been seen by some as a hedge against inflation. But it doesn't always act that way. Others have attributed the drop in the price of Bitcoin to a flight to safety by more traditional investors, who dumped what they considered a volatile "risk asset" in a time of economic uncertainty.
"The institutional investor is paying close attention to Bitcoin as many who got in last year are now losing money on their investment," Edward Moya, senior market analyst at OANDA, said in emailed commentary recently.
Tether, Terra, Impact On Bitcoin Stocks
The price of Bitcoin stands at around $21,000. That price is well down from around $57,000 at the start of December and a record $68,990.90 in early November.
That drop has threatened to swallow other Bitcoin stocks. Cryptocurrency exchange Coinbase $Coinbase Global, Inc.(COIN)$ recently said it was cutting its staff by 18%, after freezing hiring earlier on and even rescinding some job offers. Concerns have grown about the state of business analytics firm Microstrategy $MicroStrategy(MSTR)$ , which has borrowed millions to buy Bitcoina nd make the digital asset its primary reserve.
Elsewhere, the crypto lending platform Celsius halted withdrawals and transfers, citing "extreme market conditions."CNBC reportedthat crypto hedge fund Three Arrows Capital is in liquidation. Voyager Digital, a crypto broker, suspended trading, deposits and withdrawals.
The crypto sell-off also caused tremors among so-called stablecoins — digital assets whose value is pegged to a more traditional asset, like the dollar, and which allow more fluid trading within the crypto ecosystem. The stablecoin TerraUSD collapsed. The widely used stablecoin Tether briefly fell below its $1 peg.
Bitcoin Stocks
Bitcoin stocks are not all the same.
Some, such as Riot Blockchain $Riot Blockchain, Inc.(RIOT)$ , are in the business of mining Bitcoin. Some, like MicroStrategy, simply buy Bitcoin, giving investors a way to play the cryptocurrency on the major exchanges. The rise of Bitcoin ETFs may make such companies that buy Bitcoin less appealing.
Bitcoin miners and buyers are directly tied to Bitcoin and the cryptocurrencies they hold.
Other Bitcoin stocks serve as cryptocurrency's financial plumbing. Silvergate Capital $Silvergate Capital(SI)$ is known as a "crypto bank" and runs a digital-currency exchange platform. Coinbase is a leading Bitcoin and cryptocurrency exchange, and makes money from fees on transactions. But the companies' stock prices are still affected by the day-to-day fluctuations of Bitcoin and other crypto prices, and trading activity for those digital coins.
Coinbase Stock
Cryptocurrency exchange Coinbase has a 17Composite Rating. ItsEPS Ratingis 34. Shares have traded tightly more recently.
Coinbase, in reporting first-quarter results in May, said it lost $1.98 per share, well below expectations for an eight-cent per-share profit. Revenue also missed expectations. The company's look into the current quarter was not upbeat.
"In April, we saw continued declines in both crypto asset volatility and crypto asset prices, which we believe are associated with weakness in financial markets," it said.
In a filing, Coinbase also warned of its potential failure to protect customers' crypto assets held on the platform if it went bankrupt.
"Moreover, because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors," the company said.
That would mean users might not be able to reclaim their holdings. Traditional bank accounts and non-crypto brokerages typically have more protections.
As of March 31, Coinbase held $256 billion in traditional currencies and cryptocurrencies for customers, it said in the filing.
CEO Brian Armstrongon Twittersaid Coinbase had "no risk of bankruptcy." And he said the warning was included in the filing due to new SEC requirements for public companies that hold crypto for others.
Silvergate Capital Stock
Silvergate Capital is the holding company for Silvergate Bank, which provides financial services for digital currencies that try to keep up with the 24/7 pace of cryptocurrency trading.
Silvergate has a 56 Composite Rating and a 97 EPS Rating.
Along with traditional commercial and residential lending services, Silvergate runs an exchange network that allows its digital-currency clients and institutional investors to send money to accounts of other Silvergate clients at any time. Its digital-currency customers include digital-currency exchanges and institutional investors, and the network is used for cryptocurrency settlements.
Silvergate's network also allows digital-currency customers to borrow dollars from the bank to buy Bitcoin, using Bitcoin as collateral. Silvergate plans to launch a so-called stablecoin this year.
"Through conversations with our customers, we identified a need for a U.S. dollar-backed stablecoin that is regulated and highly scalable to further enable them to move money without barriers," it said in a recent release.
In April, the company reported fourth-quarter earnings per share and revenue that beat expectations. Digital-currency customers increased 9% from the prior quarter to 1,503.
ProShares Bitcoin Strategy
The ProShares Bitcoin Strategy ETF began trading in October, not long before Bitcoin's peak. It has since seesawed in tandem with Bitcoin. The BITO ETF does not have ratings from IBD.
The SEC has been reluctant to approve an ETF directly tied to Bitcoin's twists and turns. But last year, SEC Chair Gary Gensler indicated that the agency could be more receptive to applications forETFs tied to Bitcoin futures.
Still, the U.S. government has remained wary of Bitcoin's volatility, energy consumption and its role in illicit financial activity.
Bitfarms Stock
Bitfarms, a Bitcoin miner, is down from highs reached in November. The company's first-quarter results were mixed.
The stock has a 39 Composite Rating. Its EPS Rating is 76.
Signature Bank Stock
Signature Bank stock has retreated from record highs. The stock has a 64 Composite Rating. Its EPS Rating is 90. Shares are below their 200-day and 50-day lines.
Signature has a blockchain-based digital payments platform called Signet.The company's first-quarter revenue missed expectations. But earnings per share beat.
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