Crypto Stocks Crash as Bitcoin Sinks Below $93K Amid Fed Signals

Microstrategy Leads Crypto Stock Slump Following Bitcoin's 10% Drop

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Dec 20, 2024
Summary
  • Bitcoin’s sharp decline and record ETF outflows spark a widespread sell-off in crypto-exposed stocks
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Shares of cryptocurrency-related companies plunged sharply Thursday, mirroring volatility in the digital asset market and a pair of moderately bullish Fed signals. Microstrategy (MSTR, Financial) Falling 5.5%, where other noteworthy down periods involved Riot Platforms (RIOT, Financial), Coinbase (COIN, Financial), and CleanSpark (CLSK, Financial).

Bitcoin, which plummeted 10% from the latest peak, just above $108,000, has itself been sold off under $92,149 in Friday morning trading. Even more so, smaller tokens like Ether and Dogecoin saw even steeper falls. Analysts say the downturn is related to decreasing speculative interest in response to signs of a less accommodative U.S. monetary policy.

According to Bloomberg data, an outflow of $680 million—the largest single-day withdrawal of Bitcoin from U.S. exchange-traded funds that directly invest in Bitcoin—was also the 15th day in a row of inflows and helped investor sentiment. However, this raises the caution of outflows as investors scale away the expectations of speculative crypto assets.

Pressure is building on crypto-related equities following recent guidance by the Federal Reserve, which dashed hopes for imminent interest rate cuts. As Bitcoin continues to toggle between gains and losses, digital currencies helped draw the rest of the market higher, leaving highly vulnerable companies exposed.

While we can't be certain exactly what these market recalibration implications will be for crypto-focused firms, going forward, they will closely monitor the crypto sector's response to changing asset values and reverting monetary policies.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure