Shares of crypto-focused companies plunged this week, ending a period of pain for the digital asset sector marked by a resurgence of macroeconomic uncertainty and lingering fallout from October’s liquidity crunch and mixed corporate earnings.
Coinbase (COIN), Block Inc. (XYZ), and Robinhood (HOOD) are down 11% to 14% this week, erasing recent gains and highlighting the fragile sentiment surrounding crypto stocks, according to Google Finance data.
Coinbase on October 30 reported better-than-expected revenue and revenue as it advances its Everything Exchange initiative, which aims to expand the volume and diversity of tradable assets on its platform. However, despite the positive results, the stock was unable to maintain its momentum due to broader market pressures and declining risk appetite.
Meanwhile, Jack Dorsey’s fintech Block Inc. came under fresh selling pressure after it missed quarterly estimates and came under intense investor scrutiny over slowing growth and profitability at its flagship Square payments unit.
In contrast, Robinhood posted strong results in the third quarter on the back of a surge in cryptocurrency trading volume. However, a shake-up in management and slower-than-expected growth in the crypto sector weighed on the earnings beat, sending the stock price down.
Despite this week’s decline, Robinhood remains the best-performing stock of this trio, up more than 200% year-to-date.
Robinhood stock’s year-to-date performance. Source: Google Finance
Related: Coinbase executive says US virtual currency bill is ‘like oil for the on-chain economy’
Macro concerns and sentiment weigh on crypto stocks
Cryptocurrency stocks are under pressure as uncertainty surrounding the ongoing U.S. government shutdown and the lingering effects of last month’s historic liquidation event, which wiped out around $19 billion in leveraged positions, have spread widespread risk-off sentiment across digital asset markets.
The crash prompted Crypto.com CEO Chris Marszalek to call for a regulatory review of how the exchange handled the decline.
The incident also reignited concerns about the industry’s hidden vulnerabilities (or what some market watchers call “dead bodies”), leading analysts to scale back their outlook for the crypto sector.
These concerns triggered another wave of selling in the cryptocurrency market this week, with Bitcoin (BTC) briefly falling below $100,000, a 20% correction from its all-time high.
Since hitting an all-time high in early October, Bitcoin prices have once again become more volatile. Source: Cointelegraph
Related: ISM Manufacturing PMI suggests Bitcoin cycle could extend beyond historical norms