Stock development at half-staff since the beginning of the year
While Bitcoin hovers around $ 30,000, stocks in the cryptocurrency sector have been looking gray for several months, especially for this year 2022, which has seen a sharp decline in the crypto market.
Since January 1, the action of the crypto platform Coin base (CORNER) poster a decrease of 71% while the action Microstrategy (MSTR) 59% decrease. For Coinbase, which made its IPO in April 2021, this performance is very disappointing. At the time, it was proclaimed by several analysts as the large crypto company to invest in to gain a foothold in the cryptocurrency market, and since then the stock has only fallen. It almost accumulates 80% decline since listing a little over a year ago, far more than large cryptocurrencies like Bitcoin (BTC) or Ether (ETH).
In terms of MicroStrategy, the company does not operate directly in Bitcoin (BTC), but it is its founder, the famous US CEO Michael Saylor, who is a cryptocurrency enthusiast. He and his team performed their first bitcoin purchase with the company’s cash in August 2020 at a cost of $ 11,650. Additional purchases made after that date brought the inventory up to a total of about 129,000 bitcoins at an average price of $ 30,700 each, meaning the company has a small loss on this investment.
In the case of companies specializing in cryptocurrency mining, we record similar performance: the shares in Digital Marathon (MARA) and Riot Blockchain (RIOT) has resp down 64% and 67% since the beginning of the year. Both of these companies operate Bitcoin mining farms throughout the United States.
Banks linked directly or indirectly to cryptocurrencies such as Galaxy Digital (GLXY.TO) and Silvergate Capital (SI) has seen their shares are down 55% and 42% since the beginning of the year.
Edward Moya, market analyst at Oanda, an investment firm, said:
“Bitcoin’s long – term fundamentals have not changed in several months, but the growth / recession problems have made it a very challenging environment for cryptocurrencies. »
All this makes it possible to realize that the performance of cryptocurrencies is strongly correlated with the macroeconomic context in which we live and with traditional stock market indices.
👉 To learn more, find our complete guide on how to buy Bitcoin (BTC)
Disappointing financial results
To top it off, these cryptocurrency companies announced their financial results for the first quarter of 2022 this week. And the least we can say is that for most of them, these results are very disappointing.
Coinbase, which announced its results last night, said revenue of $ 1.17 billion in the first quarter, far from what analysts expected with $ 1.47 billion in revenue. The number of monthly active users in this quarter was 9.2 million, an increase from a year ago (6.1 million), but a marked decrease compared to the previous quarter (11, 4 million monthly active users). Finally, the company had a large deficit.
Coinbase shares fell 17% after the earnings announcement after the Nasdaq closed yesterday. She still does not appear to have reached the bottom.
But the company’s CEO, Brian Armstrong, is reassuring:
“We tend to do our best in times of recession, so ironically, I’ve never been more optimistic about where we stand as a company.”
Riot Blockchain announced results below expectations, but growing year by year. After the stock rose very fast by 2% after trading after the results, it again lost 1% just like the competitors’ shares.
In fact, the price correction for all these companies is not surprising when we look at how the market has evolved over several months. However, they often accuse a loss much higher than the major cryptocurrencies if we compare performance in the same period. Simply because they are technological stocks above all, and therefore they accuse both the decline of technological stocks and the parallel fall of cryptocurrencies. We must not forget that, unlike Bitcoin, they must be accountable to investors throughout their financial results. A rather explosive cocktail.
👉 On the same topic – MicroStrategy buys Bitcoin (BTC) for $ 190 million back
Source: Coinbase Q1 results ; Coindesk
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