Equity performance at half-mast since the start of the year
While Bitcoin hovers around $30,000, shares 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 Coinbase (CORNER) poster a drop of 71% while the action Microstrategy (MSTR) 59% drop† For Coinbase, which went public in April 2021, this performance is very disappointing. It was heralded by several analysts at the time as the major crypto firm to invest in to gain a foothold in the cryptocurrency market, and its share has only fallen since then. It’s almost piling up 80% drop since IPO a little over a year ago, much more than major cryptocurrencies such as Bitcoin (BTC) or Ether (ETH).
As for MicroStrategy, the company does not directly operate in Bitcoin (BTC), but its founder, famous American CEO Michael Saylor, who is a cryptocurrency enthusiast. He and his team performed their first bitcoin purchase with company money in August 2020 at a cost of $11,650. Further purchases after that date brought the holdings to a total of approximately 129,000 bitcoins at an average price of $30,700 each, meaning the company is incurring a small loss on this investment.
As for companies specializing in cryptocurrency mining, we record similar performance: the shares of Digital Marathon (MARA) and Riot Blockchain (RIOT) have respectively a decrease of 64% and 67% since the beginning of the year. Both companies operate Bitcoin mining companies in the United States.
Banks directly or indirectly linked to cryptocurrencies such as: galaxy digital (GLXY.TO) and Silvergate Capital (SI) have seen their shares are down 55% and 42% since the start of the year.
Edward Moya, a market analyst at Oanda, an investment firm, said:
“Bitcoin’s long-term fundamentals have not changed in months, but the growth/recession issues have made it a very challenging environment for cryptos. †
All this then makes it possible to realize that the performance of cryptocurrencies is highly correlated with the macroeconomic context we live in, and with traditional stock market indices.
👉 For more information, find our complete guide on how to buy Bitcoin (BTC)
Disappointing financial results
To top it off, these cryptocurrency companies released their first quarter 2022 financial results this week. And the least we can say is that these results are very disappointing for most.
Coinbase, which announced its results last night, said: revenue of $1.17 billion in the first quarter, a far cry from what analysts expected with $1.47 billion in revenue. Monthly active users this quarter was 9.2 million, up from a year ago (6.1 million), but down sharply from the previous quarter (11.4 million monthly active users). Finally, the company recorded a significant loss.
Coinbase shares fell 17% after announcing gains after the Nasdaq closed yesterday. She still doesn’t seem to have hit rock 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 on year† After the stock recovered 2% very quickly after the trading results, it again lost 1% like its competitors’ shares.
In fact, the price correction of all these companies is not surprising when we see how the market has been evolving for several months. However, they often accuse a loss much higher than the major cryptocurrencies if we compare performance over the same period. Simply because they are mostly technology stocks and that is why they blame both the decline of technology stocks and the decline of cryptocurrencies. We must not forget that unlike Bitcoin, they have to be accountable to investors through their financial results† A pretty explosive cocktail.
👉 On the same topic: MicroStrategy Buys Back $190 Million in Bitcoin (BTC)
Source : Coinbase Q1 Results † Coindesk
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