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MicroStrategy Leads Crypto Stock Selloff as Bitcoin Unravels

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Matt Turner
·2 min read
MicroStrategy Leads Crypto Stock Selloff as Bitcoin Unravels
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  • MSTR

(Bloomberg) -- Cryptocurrency-related stocks plunged on Monday as Bitcoin tumbled to its lowest level in 18 months amid a deepening selloff in risk assets and after a crypto lender halted withdrawals from its platform.

Most Read from Bloomberg

MicroStrategy Inc., which over the last two years has amassed more than 129,000 Bitcoins, led the slump, plunging 25% to close at its lowest level since October 2020. Other crypto stocks including Marathon Digital Holdings Inc., Riot Blockchain Inc. and Coinbase Global Inc. also saw outsized declines of at least 10% each. The MVIS CryptoCompare Digital Assets 100 Index, which measures the 100 largest digital assets, sank as much as 17%.

READ: MicroStrategy’s Bitcoin Bet Backfires as Losses Near $1 Billion

The sharp move lower in Bitcoin came as crypto lender Celsius Network Ltd. said it was pausing withdrawals, swaps and transfers on its platform. Concerns surrounding the sustainability of the high yields offered by the firm have surfaced in recent weeks following the collapse of the TerraUSD (UST) stablecoin, which promised yields of as much as 20% to depositors.

“Crypto fans have become used to volatile rides, but these rollercoaster descents are increasingly hard to stomach,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “With the era of cheap money coming rapidly to an end, traders are becoming much more risk averse and turning their backs on crypto assets.”

Read more: Crypto Lender Celsius Stops Withdrawals, Fuels Market Slump

Crypto stocks have been under pressure for months as the prospects of higher interest rates, a possible recession and the collapse of the Terra/Luna ecosystem in May weighed heavily on investor sentiment. The CoinShares Blockchain Global Equity Index, which tracks 49 firms from around the globe with crypto exposure, has fallen nearly 40% so far this year, on pace for its worst annual performance on record.

While risk assets more broadly are lower Monday morning, the plunge by crypto stocks has been exacerbated by the rapid drop in Bitcoin prices. The world’s largest digital asset toppled as much as 17% and briefly broke below the $23,000 level as it fell for a seventh day in a row.

“Sentiment for cryptos is terrible as the global crypto market cap has fallen below $1 trillion dollars,” said Ed Moya, senior market analyst at Oanda. “Bitcoin is attempting to form a base, but if price action falls below the $20,000 level, it could get even uglier,” he added.

(Updates with analyst comment in final paragraph, updates pricing throughout)

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.

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