The last trading day of 2023 was not kind to the crypto stocks, as many of them suffered losses amid a volatile market. Bitcoin, the leading cryptocurrency, failed to sustain its rally above $40,000 and dipped below $38,000 at one point. The overall crypto market cap also declined by more than 5% in the past 24 hours.
One of the hardest-hit sectors in the crypto space was the exchange stocks, as they faced regulatory uncertainty and increased competition. According to a report by Blockworks, some of the notable losers in this category were:
- Coinbase (COIN), the largest US-based crypto exchange, which dropped by 4.6% to $208.76, its lowest level since May 2021.
- Voyager Digital (VYGR), a Canadian crypto broker, which plunged by 11.4% to $9.01, its lowest level since July 2021.
- Bit Digital (BTBT), a Chinese crypto mining company that also operates a crypto exchange, which fell by 9.7% to $4.66, its lowest level since October 2021.
The exchange stocks were affected by several factors, such as the ongoing investigation by the US Securities and Exchange Commission (SEC) into Coinbase’s lending program, the potential approval of a spot Bitcoin ETF that could reduce the demand for exchange services, and the emergence of new competitors like FTX and Binance.
Crypto Mining Stocks Also Suffer
Another sector that faced a rough day was the crypto mining stocks, as they followed the downward trend of Bitcoin and other cryptocurrencies. Mining is the process of validating transactions and creating new coins on a blockchain network, and it requires a lot of computing power and electricity. The profitability of mining depends largely on the price of the underlying crypto asset and the difficulty of the network.
Some of the notable losers in this category were:
- Marathon Digital (MARA), one of the largest Bitcoin miners in North America, which dropped by 7.8% to $28.61, its lowest level since August 2021.
- Riot Blockchain (RIOT), another major Bitcoin miner in North America, which fell by 6.9% to $21.01, its lowest level since September 2021.
- Hive Blockchain (HIVE), a Canadian miner that mines both Bitcoin and Ethereum, which declined by 8.4% to $2.07, its lowest level since June 2021.
The mining stocks were affected by several factors, such as the rising difficulty of the Bitcoin network, which makes it harder to mine new coins, the increasing competition from other miners, especially in China, where the government has eased its crackdown on the sector, and the environmental concerns over the high energy consumption of mining.
Crypto-Related Stocks Also Feel the Pressure
The crypto-related stocks, which are companies that have exposure to the crypto industry through various means, such as holding crypto assets, offering crypto services, or investing in crypto projects, also faced a tough day. Some of the notable losers in this category were:
- MicroStrategy (MSTR), a business intelligence firm that holds over 100,000 Bitcoins on its balance sheet, which dropped by 6.4% to $379.51, its lowest level since July 2021.
- Square (SQ), a payments company that offers crypto trading and custody services, and also holds over 8,000 Bitcoins on its balance sheet, which fell by 4.1% to $139.31, its lowest level since November 2020.
- PayPal (PYPL), a payments giant that offers crypto buying and selling services, and also plans to launch a crypto super app, which declined by 3.2% to $177.32, its lowest level since June 2020.
The crypto-related stocks were affected by several factors, such as the lower demand for crypto services amid the market downturn, the regulatory uncertainty over the crypto industry, and the increasing competition from other players, such as Visa and Mastercard, which are also expanding their crypto offerings.
What’s Next for the Crypto Stocks?
The crypto stocks have had a roller-coaster year, as they witnessed massive gains in the first half of 2023, followed by a steep correction in the second half. The crypto stocks have been highly correlated with the price movements of Bitcoin and other cryptocurrencies, which have also experienced a lot of volatility this year.
The outlook for the crypto stocks in 2024 will depend largely on the performance of the crypto market, which will be influenced by several factors, such as the adoption of cryptocurrencies by institutional and retail investors, the innovation and development of new crypto products and services, the regulation and oversight of the crypto industry by various authorities, and the competition and collaboration among the crypto players.
The crypto market is still in its early stages of growth, and it has a lot of potential to disrupt and transform various sectors of the economy and society. The crypto stocks offer a way for investors to gain exposure to this emerging and exciting industry, but they also come with a lot of risks and challenges. Therefore, investors should do their own research and due diligence before investing in any crypto stock, and be prepared for a lot of volatility and uncertainty along the way.
