Bad news continues to dominate cryptocurrency media headlines and the biggest piece of news on May 12 was the unexpected collapse of the Terra ecosystem. In addition to the weakness seen in equities, publicly traded companies with exposure to blockchain startups and cryptocurrency mining have also seen a sharp decline.
Bitcoin mining stocks continue bleeding…
Mining investors probably wish they had simply bought bitcoin instead at the beginning of 2022, as most bitcoin mining stocks have underperformed bitcoin by a wide margin. pic.twitter.com/anSoUEoUJ1
— Jaran Mellerud (@JMellerud) May 11, 2022
Bitcoin mining stocks continue to bleed…
Mining investors probably wish they had simply bought bitcoin in early 2022, as most bitcoin mining stocks have underperformed bitcoin by a wide margin.
While it may be easy to blame the current pullback solely on the implosion of Terra, the truth is that the Bitcoin mining stock price has largely mirrored the performance of BTC since it peaked in November 2020.
The price of these securities is likely to struggle as Bitcoin continues to bleed to death in the face of multiple headwinds such as rising interest rates, inflation and global conflicts.
Crypto-financial services also correct
It’s not just Bitcoin mining stocks that have come under pressure of late, as all sorts of companies with some kind of association with cryptocurrencies have felt the heat in May.
Following the release of forward-looking statements projecting a continued decline in active users and trading volume, Coinbase (COIN) stock price hit an all-time low of $41.23 in early trading hours on May 12. .
Robinhood also saw its share price drop to a new all-time low of $7.73 on May 12, a day after the firm revealed that its crypto transaction revenue fell 39% year-on-year in the first quarter, passing from $88 million in 2021 to $54 million in 2022.
While Robinhood is not a crypto-only exchange, roughly 18% of its Q1 net income came from crypto-related transactions, which is significant when comparing the size of the cryptocurrency market to the other markets it supports. on the platform.
The weakness extends to the entire technology sector
The declines in crypto-related stocks reflect a context of widespread weakness in financial markets, especially in the technology sector.
Several years of bullish forecasts and quantitative easing have resulted in an overvalued and volatile tech sector that collapses if earnings fall short of expectations.
FAANG stocks, once the darlings of the mighty stock market, have led the charge lower, weighing on the Nasdaq, which closed April with its worst monthly performance since the 2008 financial crisis.
The Nasdaq’s losses accelerated further in May as the benchmark fell another 9.15% to its lowest level since November 2020.
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