Tesla and Coinbase Lead Crypto-Related Stocks Fall As Bitcoin Slumps

SpaceX founder and Tesla CEO Elon Musk watches as he visits the construction site of the Tesla gigafactory in Gruenheide, near Berlin, Germany, on May 17, 2021.

Michele Tantussi | Reuters

Cryptocurrency-related stocks led by Tesla and Coinbase tumbled on Wednesday as Bitcoin plunged the equivalent of a bear market in just one day.

Bitcoin at its lowest point of the day was down more than 30% on the session to $ 30,001.51, its lowest level since the end of January, according to Coin Metrics. The cryptocurrency and related stocks recovered some losses later on Wednesday, and bitcoin rose again to $ 39,774 at 4:01 p.m. ET.

“It had a confluence of events … where the positivity in price action started to break, and now we have a sell-off event,” Galaxy Digital CEO and president Mike Novogratz, longtime bitcoin bull, told CNBC. Squawk Box. ”“ The market will consolidate. You will find a background somewhere. I hope it is near here ”.

The move comes after China banned financial institutions from cryptocurrency-related transactions on Tuesday. Separately, a JPMorgan report showed that large institutional investors were ditching bitcoin in favor of gold.

This month’s pullback in bitcoin intensified a week ago after Tesla CEO Elon Musk seemed to change his tune on crypto a bit by saying the company would stop accepting bitcoin as payment due to surrounding environmental concerns. crypto mining.

Tesla fell about 2.5% on Wednesday. Musk on Wednesday morning indicated that Tesla is not selling its large amount of bitcoin amid the cryptocurrency crash.

Microstrategy, which made headlines by purchasing a significant amount of bitcoin for its corporate treasury, plunged 6.6%.

Coinbase, the recently public crypto exchange, fell about 6% on Wednesday afternoon. The website appeared to be down for some users Wednesday morning, but the company said it resumed service a few hours later.

The price of Bitcoin approached $ 65,000 five weeks ago before peaking, around the time of Coinbase’s public debut.

“Coinbase’s trade debut coincides with the peak of Bitcoin and many traders cannot make a convincing argument that it will be able to recoup all those losses since then,” said Edward Moya, senior market analyst at OANDA.

Square and PayPal, which facilitate cryptocurrency transactions and have been big buyers, fell on Wednesday morning before recovering for the day. Square fell 1.5% and PayPal recouped losses to close 0.6% higher.

Nvidia also fell, then rallied later on Wednesday and the stock was up 0.4%. The company makes chips that are used in cryptocurrency mining, but is reportedly trying to curb their use for that purpose.

Grayscale Bitcoin Trust, the popular trust that owns a large number of bitcoins, fell 5% on Wednesday.

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CNBC Michael Bloom contributed to reporting.

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