Analysts and investors are scrambling to hit rock bottom in the wake of a brutal month that ended in the brains of crypto stocks. black rock Inc. says most digital asset companies will not survive.
cryptocurrency companies, including coin base Global Co., Ltd. Galaxy Digital Holdings Co., Ltd., and MicroStrategy Inc. all plunged more than 25% last month. The drop added to the pain of a disastrous year amid a significant and prolonged plunge in Bitcoin and other digital tokens. The three companies have rallied this week, but are losing about $52 billion in shareholder value in 2022.
Already reeling from the so-called crypto winter, investors were hit hard by the collapse of the famous Sam Bankman-Fried FTX exchange in early November, sending Bitcoin plummeting. Additionally, BlackRock CEO Larry Fink said this week that he expects most cryptocurrency companies to go bankrupt after the demise of FTX. The Schwab Index, which tracks crypto stocks, is down 63% this year, coming out of its worst month since June.
“After a year when many tokens lost more than 70% of their value, doubts about whether cryptocurrencies have a future prevailed and the collapse of FTX exacerbated the confidence crisis that began in the spring.” Mark Palmer said. Analyst at BTIG LLC.
Companies involved in this sector include Silvergate Capital Corp. and signature bank take a hit. Mining stocks have been among the worst performers, with Marathon Digital Holdings and Hut8 Mining both seeing their shares fall about half in November.
FTX’s sudden downfall has sparked contagion fears across the industry, but this week, cryptocurrency lender BlockFi Inc. filing for bankruptcy.
Cryptocurrencies are ‘poisonous for investors’
“We expect the crypto space to remain toxic to investors in the near term, and we continue to await potential contagion impacts as a result of FTX’s bankruptcy, so chain-wide activity will continue to impact users,” Chase White said. We expect it to be relatively quiet between ,Analyst compass needle Points, wrote in a note to the client.
Silvergate now finds itself playing damage controlThe company, whose stock fell a record 52% in November, said a few weeks ago that its exposure to FTX accounted for less than 10% of its digital asset deposits. This week, he said his exposure to BlockFi is under $20 million.
Coinbase is in a similar situation. Brian Armstrong, CEO, twitter Multiple times in recent weeks to reassure investors that cryptocurrency exchanges are maintaining a solid foundation. So far, it seems to have had little effect for upsetting traders and analysts.
Coinbase closed at a record low on November 21, Downgraded by company analysts including bank of america The Corporation and Daiwa Securities have the lowest buy ratings since August 2021, according to data compiled by Bloomberg. Coinbase’s stock has plummeted in his four weeks, but it’s still down about 80% this year, losing about $44 billion in value.
Cryptocurrency mining stocks soared and then got worse energy Costs add to the challenge of devaluing cryptocurrencies. Core Scientific shares have fallen nearly 99% this year.On its third-quarter earnings call, the company said his nine-month losses through September were $1.7 billion It is also said that they may have to file for bankruptcy if they cannot find additional funds.
Cryptocurrency mining stocks slump already struggle To repay $4 billion in loans related to mining equipment.
Indeed, Fink, whose firm has invested about $24 million in FTX, said he still sees potential in the technology underlying cryptocurrencies, such as instant settlement of securities.
And some asset managers see opportunity in crashed stocks.Cathy Wood’s Ark Investment Management Added Cryptocurrency investments in the weeks following FTX’s bankruptcy, including Coinbase, Silvergate and Grayscale Bitcoin Trust.Wood also told Bloomberg tv set She supports her prediction that bitcoin, which traded at around $17,000 in New York on Friday afternoon, will reach $1 million by 2030.
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