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Cryptocurrency-related stocks like BIT Mining (BTCM) -8.9%, Bakkt (NYSE:BKKT) -4.9% and HIVE Blockchain (HIVE) -6.1% are falling in Monday afternoon trading despite modest gains seen in bitcoin (BTC-USD) and other major digital tokens.
Over the past 24 hours, Bitcoin (BTC-USD +0.1%) is holding slightly above its psychological key level of $30K, trading at $30.05K as of shortly before 3:00 p.m. ET. Ethereum (ETH-USD +1.8%) is rising to $2.05K.
Bitcoin’s (BTC-USD) modest upswing on Monday followed seven consecutive weeks in decline, its longest losing streak since August 2011, according to data compiled by Bloomberg. It comes at no surprise that stocks have faced a similar cyclical downturn given its strong correlation with bitcoin.
“If the S&P falls some more, that should create one final flush and a great buying opportunity for Bitcoin,” Fundstrat Global technical strategist Mark Newton said, as quoted by Bloomberg. “There’s a lot of bearishness, and we should be approaching a time when you really want to buy into that in the next couple of months.”
Overall, bitcoin (BTC-USD) is off nearly 25% M/M and -37% YTD, as regulators across the globe ramp up calls for greater oversight in the decentralized space after tens of billions of dollars were wiped out from TerraUSD stablecoin (UST-USD) and Luna (LUNA-USD) in the beginning of May.
Speaking of stablecoins, which are designed to be pegged to the value of a more “stable” asset, Kristalina Georgieva, the head of the International Monetary Fund, believes stablecoins that are not backed by assets (with UST as a prime example) are nothing more than a pyramid scheme, she said during a panel discussion at the World Economic Forum.
“When we look at stablecoins this is the area where the big mess happened,” Georgieva said, as quoted by CNBC. “If a stablecoin is backed with assets, one to one, it is stable. When it is not backed with assets, but it is promised to deliver 20% return, it’s a pyramid.”
Other crypto-focused stocks experiencing selling pressure intraday include: Hut 8 Mining (HUT -1.2%), Bitfarms (BITF -1.1%), SOS (SOS -3.2%), Bit Digital (BTBT -2.7%), CleanSpark (CLSK -1.9%), Greenidge Generation (GREE +0.4%) and Stronghold Digital (SDIG +0.2%).
Take a look at why SA contributor Dane Bowler sees bitcoin (BTC-USD) as a Strong Sell.
Earlier, Guggenheim’s Scott Minerd sees a lot more downside for bitcoin to $8K.