Crypto Proxy Stocks Follow Market Lower on ‘Bloody Tuesday’
“Bloody Tuesday” wasn’t just limited to cryptocurrencies, but stocks with direct and indirect exposure to the digital asset class. These once celebrated companies posted sharp losses on Tuesday alongside the world’s biggest cryptocurrencies.
The Decline of Crypto Proxy Stocks
In terms of losses, shares of Riot Blockchain Inc. (RIOT) were among the hardest hit. The firm plunged 16.5% to $18.28, the lowest since early December. Riot is the first pure play blockchain company to be listed on the Nasdaq.
LongFin Corp (LFIN), a U.S.-based alternative finance company, shed 8.5% to close at $39.96.
Meanwhile, tZero parent Overstock.com (OSTK) plunged 11% to $70.25 for its lowest settlement in nearly a month.
Other crypto proxy stocks to fall on Tuesday included chipmaker Nvidia Corp (NVDA), Canada-based Hive Blockchain Technologies Ltd. (HIVE) and Eastman Kodak Co. (KODK), the imaging company that has its eye on the mining enterprise.
These companies are no stronger to crypto-related volatility, having routinely been dragged around by the performance of bitcoin. Losses for these stocks were practically inevitable on Tuesday as the global cryptocurrency market declined by as much as $190 billion.
Virtually every cryptocurrency in the top 100 was down on rumblings that South Korea was considering extreme measures to eliminate speculation from the cryptocurrency market. At the time of writing, authorities were still weighing proposals to rein in speculation on domestic exchanges. Seoul announced Monday it would decide on a next course of action after “sufficient consultation and coordination of opinions.”
The Future of Crypto Stocks
Although it’s difficult to project where the crypto equity class is headed, it’s important to distinguish established technology companies from those looking to pivot into digital currency for some publicity. The likes of Overstock.com and Nividia are certainly some of the more promising businesses to venture into cryptocurrency. However, the lesser-known players will still be snatched up by investors given the relative dearth of traditional assets tied to cryptocurrency.
That being said, institutional investors are starting to get a taste of cryptocurrency. Last month, bitcoin futures hit the market, joining a small list of traditional assets with direct exposure to the crypto market. In addition to futures contracts, Grayscale operates the Bitcoin Investment Trust (GBTC), which recently launched a 91-for-1 stock split. This means that each investor in the fund will get an additional 91 shares for every one share they own.
GBTC also declined sharply on Tuesday, with the market price per share falling 11.8% to $1,731.50. The fund could be vulnerable to bigger declines on Wednesday as bitcoin prices continue drifting lower. The world’s biggest cryptocurrency touched a session low of $10,047.06 on Tuesday, its lowest since early October.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.