Crypto Companies’ Stocks Decline Despite SEC Approval of Spot Bitcoin ETFs

Summary

  • On January 11, stock prices for renowned cryptocurrency-related companies such as Coinbase, MicroStrategy, Marathon Digital, and Riot Platforms, plummeted despite the SEC’s approval of spot exchange-traded funds (ETFs).
  • The drop in stock prices was surprising, especially with the anticipations around spot Bitcoin ETFs providing direct exposure to Bitcoin’s price for investors.
  • Even with high trading volumes, Coinbase experienced significant selling pressure. Analyst ratings indicated a varied outlook for these companies.

Falling Stocks in Surprising Market Response

Following approval of spot exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC), renowned cryptocurrency firms such as Coinbase, MicroStrategy, Marathon Digital, and Riot Platforms, recorded a surprising decline in their share values on January 11th. Potential mainstream acceptance of cryptocurrencies backed by the green light for spot Bitcoin ETFs by the SEC showed an unexpected market response as their stock prices went down.

Grayscale Bitcoin Trust vs. Other Crypto Companies

This decline occurred even when the Grayscale Bitcoin Trust showed an initial rally post-transformation into an ETF. A direct exposure to Bitcoin prices for investors is what the spot Bitcoin ETFs have been expected to deliver, hence the surprising response. Coinbase, a key crypto exchange holding the role of custodian for Grayscale’s newly approved ETF and other funds, experienced significant selling pressure on January 10th and 11th.

Analyst Ratings and the Crypto Market

Analyst ratings have portrayed a mixed outlook for these firms. Whilst Mizuho has sustained an “underperform” rating with a $54 price target for Coinbase, MicroStrategy, known for its significant Bitcoin holdings, has been given a “buy” rating with a target price of $607.75. Marathon Digital and Riot Platforms, involved in crypto mining, received a “hold” recommendation and a “moderate buy” rating with target prices of $13.61 and $17.09, respectively.

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Considering these developments, it’s clear that the forex landscape and trading may be affected, particularly with assets tied to the aforementioned cryptocurrency companies. The potential ripple effect could be noteworthy and needs further monitoring.

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