Cointelegraph By Jordan Finneseth
Bad news continues to dominate crypto media headlines and May 12’s juiciest tidbit was the unexpected collapse of the Terra ecosystem. In addition to the weakness seen in equities, listed companies with exposure to blockchain startups and cryptocurrency mining have also declined sharply.
Bitcoin mining stocks continue bleeding…
Mining investors probably wish they had simply bought bitcoin instead at the beginning of 2022, as most bitcoin mining stocks have underperformed bitcoin by a wide margin. pic.twitter.com/anSoUEoUJ1
— Jaran Mellerud (@JMellerud) May 11, 2022
While it may be easy to blame the current pullback solely on Terra’s implosion, the truth is that the price of Bitcoin mining stocks has largely mirrored the performance of BTC since reaching a peak in November 2020.
It’s likely that the price of these stocks will struggle as long as Bitcoin continues to bleed lower in the face of multiple headwinds, including rising interest rates, inflation and global conflict.
Crypto financial services also correct
It’s not just Bitcoin mining stocks that have fallen under the pressure of late as all manner of companies with any kind of association with cryptocurrencies have been feeling the heat in May.
Following the release of forward-looking statements that project a continued decline in active users and trading volume, the price of Coinbase (COIN) stock hit an all-time low of $41.23 in the early trading hours on May 12.
Robinhood also saw its stock price drop to a new all-time low of $7.73 on May 12, one day after the firm revealed that its crypto transaction revenue fell 39% year-over-year in Q1 from $88 million in 2021 to $54 million in 2022.
While Robinhood is not a crypto-only exchange, roughly 18% of its Q1 net revenue came from crypto-related transactions, which is significant when comparing the size of the crypto market to the other markets supported on the platform.
Related: Bitcoin fights to hold $29K as fear of regulation and Terra’s UST implosion hit crypto hard
Weakness spreads throughout the tech sector
The declines in cryptocurrency-related stocks mirror a backdrop of widespread weakness in financial markets, especially the tech sector.
Several years of optimistic projections and quantitative easing have resulted in an overvalued and volatile tech sector that throws fits if earnings fall below expectations.
Once the darlings of the mighty stock market, FAANG stocks have led the charge lower, weighing down the Nasdaq, which closed April with its worst monthly performance since the 2008 financial crisis.
The losses for the Nasdaq further quickened in May as the benchmark index fell another 9.15% to its lowest level since November 2020.
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