US-based leading crypto exchange, Coinbase (COIN), has observed a significant drop in its shares during Q1 of the current year. This is largely due to the growing anxieties related to the US economy and its influence on digital currencies.
Bloomberg reports reveal that Coinbase’s stock has seen a decline of over 30% since the quarter’s commencement, replicating its worst performance since the late 2022 FTX exchange crash. This downturn is an echo of a larger trend impacting almost all major stocks linked to crypto, inclusive of Galaxy Digital Holdings (GLXY.TO), Riot Platforms (RIOT), and Core Scientific (CORZ).
The cryptocurrency market at large is facing turbulence, with Bitcoin (BTC) experiencing a drop of over 20% from its peak, and Ethereum (ETH) losing more than 45% of its value. These changes are occurring in the backdrop of President Donald Trump’s intensification of a “global trade war”, inciting worries about the US economy’s health. This has been further intensified by economic data, propelling the S&P 500 Index (GSPC) towards its poorest quarter since mid-2022.
Owen Lau, an analyst at Oppenheimer, pointed out that the current market situation isn’t primarily dictated by fundamental factors. Lau emphasized that macroeconomic aspects such as tariffs and potential trade war are significantly swaying investor sentiment. The increasing risk of a recession has reportedly contributed to the uneasiness, causing higher-risk crypto-linked stocks to exhibit even more volatility than Bitcoin itself.
The current status of the cryptocurrency market starkly contrasts the optimistic sentiment that dominated the scene at the year’s beginning, post-Trump’s election. Bitcoin hit an all-time high of over $109,000 on Inauguration Day. However, Bitcoin prices took a hit after Trump announced a strategic reserve for the leading crypto, but failed to allocate taxpayer money to expand it. Now, Bitcoin trades around $83,000, still above pre-election numbers, but far from its record high.
Despite the downturn, the cryptocurrency industry continues to gain traction in Washington and is progressively aligning with traditional financial systems. Yet, this increasing influence hasn’t resulted in a market rebound. Connor Loewen, a cryptocurrency analyst at 3iQ, expressed doubt about the current investor sentiment, stating, “What we saw a couple of months ago, I don’t know how much crazier it can get than that. I think we’re going to have to be looking for new catalysts.”
