Crypto declines are exceeded by falling stocks of digital assets

Crypto declines are exceeded by falling stocks of digital assets

Although Bitcoin, Ether and other cryptocurrencies have so far decreased this year, the shares of the digital assets have experienced more - often record - decs.

What companies can do to combat losses - if they can - remains to be seen.

The Coinbase share has fallen by about 45 % since the beginning of the year. Voyager Digital declined by about 65 % in 2022, while Galaxy digitally slipped by 29 %.

According to Lionel Rebibo, CEO of the crypto index trading platform Trakx, most crypto shares have been traded as deputy for crypto-assets themselves-especially for mining companies-what questions the current lack of correlation.

"When the cryptoasset's strong drains experienced, the crypto stocks also did so," Rebibo told Blockworks. "The movement of the shares was probably reinforced by the fact that they were very often overrated."

According to Blockworks, Bitcoin was traded around $ 42,200 on Thursday afternoon - a decline of around 12 % since the beginning of the year. Ether fell by 18 % to around $ 3,100 in this period.

According to Chris Allen, analyst at Compass Point Research and Trading, the strong price fluctuations this year have so far led to a lower crypto trade volume.

A withdrawal of private investors - the company that affects the majority of their income from trade fees - has led to an institutional debt reduction that affects coinbase and Galaxy, added to all.

Despite the clearer regulatory guidelines, including the implementation regulation of President Biden, which government authorities prescribe to examine digital assets, the industry does not expect any major changes in the foreseeable future, he said.

Coinbase offers a proxy for the market

Cathie Wood, CEO and Chief Investment Officer of the ETF manager Ark Invest, said during the Exchange ETF conference in Miami last week that the discrepancy between the evaluations of companies for digital assets and stocks has further increased at a rapid pace.

She pointed out the financing round of Blockchain.com last month, which increased the evaluation of $ 5.2 billion to $ 14 billion last March, almost by triple. At the same time, according to Wood, Coinbase crashed by 40 % to all -time lows and added that the decline "does not make any sense".

Coinbase refused to comment on this story, but managers of the company went into the share decline during a conference call in February. CFO Alesia Haas said at the time that the share was traded together with digital assets.

"To be honest, we do not really understand this, since this correlation is the growth of our market share, the diversification of our business beyond investments and not to mention the future potential of our business in the expansion into new assets and new products," said Haas at the time.

Although the transaction revenues still make up most of the revenue of the stock exchange, the company generated more than $ 500 million in subscription and service income in the past year-an annoyance compared to 2020-including $ 214 million in the fourth quarter, shortly after Coinbase launched its trading service for a monthly payment.

Coinbase presented the beta of its NFT marketplace this week, which resembles an Instagram-like social media platform.

"The message of companies is that there will be phases of high and low activity and that they build in the long term," said Allen. "[Coinbase] invests strongly, which is why we assume that you will work with losses this year and next year."

The decline of Voyager is due to the fact that the company reported an estimated total sales of around $ 100 million for the first quarter-compared to $ 165 million in the previous quarter. The number of users rose from 3.2 million to 3.5 million in the first three months of the year and thus remained behind the expectations of the analysts.

The binding of the miners of crypto prices, tech shares

crypto miner shares have also fallen. Marathon Digital has decreased by 38 % since the beginning of the year, while Riot Blockchain fell by 40 % in the same period.

According to Charlie Schumacher, Vice President of Corporate Communications, many investors see Marathon Digital, which has around 9,400 bitcoins, as a deputy for the price of cryptocurrency.

"Although we often act with Bitcoin, we have also correlated with the NASDAQ, which has fallen by 15 % since the beginning of the year," Schumacher told Blockworks. "When investors redistribute their portfolios and go 'risk-free', they go to risk without risk, and that affects large Bitcoin miners like us."

Marathon is working on providing 23.3 Exahashes by the beginning of next year-a measure of the power supply that affects the mining speed.

Although the company intends to open a research laboratory and an incubator, Schumacher said that the strengthening of his bread and butter mining remains the priority of marathon.

Among industry participants, there is skepticism about the miners' growth destinations, including marathon's goal of increasing the Hash-Rage by 500 % in a little more than a year, he added and called it "proof of the industry".

Overall, Rebibo said that he doubts that crypto companies can do a lot in the short and medium term to counter the decline in stock prices if the prices for crypto systems fall.

"If a company is clearly marked in a certain sector, its stock will strongly reflect the basic drivers of this sector - whatever the company does to differentiate itself," he said.

spokesman for Voyager and Galaxy refused to comment on the share price. A representative of Riot Blockchain did not answer a request for comment.

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The contribution "Crypto Declines Outpaced by Sinking Digital Asset Stocks" is not a financial advice.