Bad news continues to dominate crypto media headlines and the juiciest piece of information on May 12 was the unexpected collapse of the Terra ecosystem. In addition to the weakness seen in stocks, publicly traded companies with exposure to blockchain startups and cryptocurrency mining have also declined sharply.
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. pic.twitter.com/anSoUEoUJ1
— Jaran Mellerud (@JMellerud) May 11, 2022
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.
These stock prices are likely to struggle as Bitcoin continues to bleed to death in the face of multiple headwinds, including rising interest rates, inflation, and global conflict.
Financial crypto services also correct
It’s not just Bitcoin mining stocks that have come under pressure lately, as all sorts of companies with some kind of association with cryptocurrencies have been feeling 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-over-year in Q1 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 supported on the platform. .
Related: Bitcoin Struggles to Hold $29K as Terra UST Regulation Fears and Implosion Hit Cryptos Hard
Weakness spreads across the tech sector
The declines in crypto-related stocks reflect a backdrop 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 draws attacks if earnings fall short of expectations.
FAANG shares, once the darling 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 when the benchmark fell another 9.15% to its lowest level since November 2020.
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