Tuesday's Market Minute: Bitcoin's Bust

It’s no secret Monday’s session was difficult for investors exposed to Bitcoin and other cryptocurrencies. Bitcoin futures have tumbled about 68% from their all-time high in November of last year, when it touched over $69,000. Ether also has lost about 75% of its value since November. The double-digit sell-off in both products weighed on the equity market, dragging down companies with exposure to digital assets.

Coinbase, a major cryptocurrency exchange, shaved as much as $1.5B off its market cap following the open, falling as much as 16% before recovering some to close the day over 11% lower. Coinbase has dropped more than 80% this year already amid the slowdown in trading volumes and the steady decline in Bitcoin’s price, and announced today that it will lay off 18% of its staff.

Cathie Wood-led Ark Investment Management, being the single largest institutional owner of Coinbase, also saw major weakness in the ARK Innovation ETF (ARKK). Coinbase now accounts for more than 4% of the fund and has contributed in part to its 61% decline as of Monday’s close. Despite Coinbase’s unrelenting move lower, Ark upped its position by 28% at the end of March when the stock was still trading around $190/share.

Other names with exposure to digital assets also experienced major selling. Bitcoin miners Riot Blockchain and Marathon Digital both fell in the double digits, MicroStrategy – which is a software company with major holdings in Bitcoin – closed down a whopping 25%. Even Block – which has begun trading in closer correlation with cryptocurrencies’ price action – fell nearly 13% on the day.

What’s perhaps the most troubling is that unlike the rest of the market, which seems to be still reeling from Friday’s CPI number, the crypto sell-off had decent reasoning. Two of the world’s largest crypto platforms announced restricting activity as the market deterioration continued. U.K.-registered Celsius Network said that due to extreme market conditions, it temporarily halted all withdrawals, swaps, and transfers between accounts with no warning to its customers. The platform, which boasts some 1.7M customers, has about $3.7B in assets per its company website. Celsius did not give a timeframe in which customers could make withdrawals again, only saying it will “take time.”

Binance, which is the world’s largest crypto exchange, suspended withdrawals on its bitcoin network for several hours Monday. The company claimed some transactions had gotten stuck, which were causing a backlog, but advised customers the problem would be solved within a few hours.

Image sourced from Unsplash

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