COIN and HOOD drop to all-time lows, crypto-related stocks hit hard

Bad news continues to dominate the crypto media headlines, with the most notable news on May 12 being the unexpected collapse of the Terra ecosystem. In addition to the weakness in the stock market, public companies with exposure to blockchain startups and cryptocurrency mining have also experienced sharp declines in their stocks.

While it might be easy to blame Terra's implosion for the current pullback, the truth is that the price of Bitcoin mining stocks has largely reflected Bitcoin's performance since its peak in November 2020.

BTC/USDT vs. RIOT, HUT, MARA and BITF 1-day chart Source: TradingView

With multiple headwinds such as rising interest rates, inflation and global conflict, these stocks may struggle to sustain their prices as long as Bitcoin continues to fall.

Crypto financial services also face a correction

It wasn’t just Bitcoin mining stocks that fell under the latest pressure, but all companies related to the cryptocurrency felt the pressure in May.

Coinbase (COIN) stock hit an all-time low of $41.23 in early trading on May 12 following the release of forward-looking statements predicting continued declines in active users and trading volume.

COIN price 4-hour chart Source: TradingView

Robinhood’s stock also fell to an all-time low of $7.73 on May 12, a day after the company disclosed that its first-quarter cryptocurrency trading revenue fell 39% year-over-year, from $88 million in 2021 to $54 million in 2022. Dollar.

While Robinhood is more than just a cryptocurrency-only exchange, roughly 18% of its net revenue in the first quarter came from cryptocurrency-related transactions, a significant figure compared to other markets the platform supports .

Broad weakness in the tech sector

The decline in cryptocurrency-related stocks reflected a backdrop of general weakness in financial markets, especially in the technology sector.

Years of rosy expectations and quantitative easing have left the tech sector overvalued and volatile, and if earnings fall short of expectations, the industry will struggle.

The FAANGs, once stock market darlings, led losses, dragging down the Nasdaq, which closed April with its worst monthly performance since the 2008 financial crisis.

Nasdaq Composite 1-Day Chart Source: TradingView

The Nasdaq's losses accelerated further in May, with the benchmark falling another 9.15% to its lowest level since November 2020.

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