[2021-04-19] Why Crypto Stocks Plunged Today

[Woodie]

What happened
Shares of any stock related to cryptocurrencies had a rough start to the week Monday and some were down over 10%. Bitcoin (CRYPTO:BTC) fell from about $62,000 when the market closed Friday to $55,880 as of this writing, although its low yesterday was below $54,000. Ethereum (CRYPTO:ETH) was over $2,400 when the market closed Friday and is now at $2,176.

There are a number of stocks that have taken it on the chin as a result, but Square's (NYSE:SQ) drop of 5.3% was notable today. MicroStrategy (NASDAQ:MSTR) and Ebang International Holdings (NASDAQ:EBON) also fell 10.1% and 15.1% at their lows. The three stocks are down 3.9%, 8.5%, and 9.3% respectively as of 4 p.m. EDT.

So what
The crypto sell-off over the weekend was driven by fears that the U.S. government will crack down on some crypto activity. In particular, the U.S. Treasury is reportedly planning to increase oversight of financial institutions for carrying out money laundering through digital assets. The Central Bank of Turkey also banned the use of cryptocurrencies for use as payment late last week, which isn't a good sign if the trend continues.

A company like Square makes money off cryptocurrency trades on its platform, so any drop in the price will likely lead to lower commissions.

For MicroStrategy, the impact is more direct: It holds 90,531 Bitcoins with a value of $2.171 billion as of Feb. 24 on the balance sheet. The drop in crypto value is a direct loss to the company.

Ebang International makes chips for Bitcoin mining and has launched its own cryptocurrency exchange, so the drop in crypto assets could be a direct hit to the bottom line. Crypto mining relies on high prices for crypto assets, so if the drop continues demand could be hit in 2021.

These three companies show how broadly cryptocurrencies are now impacting big businesses on the market. There are transaction companies that make money off crypto trading, companies that hold crypto, and the hardware and software companies that are building crypto infrastructure. Like any commodity, they all drop when crypto does.

Now what
The reality of the market in 2021 is that volatility in cryptocurrencies is part of the market dynamics, especially for companies that have an interest in the asset class. And with a volatile asset like Bitcoin or Ethereum, stocks will inherently be volatile as well. With that said, if crypto assets jump tomorrow these stocks could as well; the volatility works both ways.

https://www.fool.com/investing/2021/04/19/why-crypto-stocks-plunged-today/

[1714778531]

1714778531

[1714778531]

1714778531

[Streets 2.0]

The unsuccessful unverified twit triggered the expected market reaction in the light of the news. Traders are often not at all privy to the details of the market and blockchain technology - they receive signals from special services and, based on their experience, react to these signals quickly. And so it turned out that we have observed recently. After the first few hours, the market figured out that the news was not reliable and the fall was stopped. No need to panic - everything will return to a bullish trend, I'm sure.

[sanjusajan]

It is really bad news because some people are gambling it. and many more investors are selling in high amount so, I think it is plugging .and due to some of the cheaters are doing some bad thing to make crash it and i hope it will be recovered with the others investors tomorrow.

[pixie85]

It is really bad news because some people are gambling it. and many more investors are selling in high amount so, I think it is plugging .and due to some of the cheaters are doing some bad thing to make crash it and i hope it will be recovered with the others investors tomorrow.

It's mostly newcomers and traders that are selling. It's not some cheaters, the market is moved by the same supply and demand as it was years back. Only in the MtGox bull run some of the volume came from a trading bot but in 2017 it was all natural and it's the same this year.

These 10% moves are completely normal for Bitcoin and were present in every single bull market, you can check it on the charts.

The volatility this time is just as high as it was 5 years ago and people are still panicking like it hasn't happened before

[Kakmakr]

www.fool.com <------ Need I say more? Can you take a website serious, when it has a name like that? A site that are focussed on traditional Fiat investments and also a dedicated section just for Warren Buffett? 

It just fart out the old, "The X government is going to ban Crypto currencies" nonsense and people on their site that are invested in Crypto currencies, panic and they sell their coins. (Basic FUD and misinformation rubbish to sabotage Bitcoin) 

[bbc.reporter]

@Kakmakr. I speculate all of these supposed crypto stocks will have a difficult time holding on to their value and might also be more volatile because they attract certain type of investors that are similar to the investors attracted to the cryptospace. The Warren Buffett value investors will avoid these type of stocks like COIN.

[Streets 2.0]

Such stocks were unlucky because they came out on the back of negative news. But look what is happening today! Bitcoin has practically won back its losses since then! Now he is very close to the price level of 60 thousand dollars! If the price breaks this level, I think we will see another rise. In addition, due to restrictions due to the COVID-19 pandemic, the classic holiday seasons have shifted or completely changed. So those who sold for cash and travel somewhere now sit at home and do not sell anything. All this will give a new impetus.