The market as a whole, which is expected to have its best week since June, provided a dramatic contrast to the unpleasant stretch for equities exposed to cryptocurrencies.
Bloomberg: Despite the biggest rally in US stocks in months, the collapse of FTX Group has caused some shares associated with the cryptocurrency industry to be headed for their steepest weekly losses in years.
This week has seen at least 15% declines in Robinhood Markets Inc., MicroStrategy Inc., and Galaxy Digital Holdings Ltd. Piper Sandler analysts have dubbed the collapse of FTX as a “clear setback” for the cryptocurrency market.
As Sam Bankman-FTX Fried’s conglomerate filed for Chapter 11 bankruptcy on Friday, jitters lingered. That occurred less than 48 hours after a competing company, Binance Holdings Ltd., made a failed rescue attempt. Digital tokens, including Bitcoin, the biggest cryptocurrency, have fallen precipitously as FTX’s collapse marked the latest victim of the crypto winter that has lasted for almost a year.
As FTX’s bankruptcy eliminates any expectations that the cryptocurrency exchange may acquire the trading platform amid suspicions surrounding Bankman-7.6% Fried’s ownership in the firm, Robinhood is on course to have its worst week since April. With a 37% loss in the last five days, MicroStrategy, which has been buying Bitcoin in large quantities since 2020, is on track for the worst decrease in more than two decades. Silvergate Capital Corp., another company that is falling precipitously, is expected to see a record 37% decline this week.
The week’s unexpected discoveries have seriously damaged trust in the hazardous business, despite a two-day recovery for some of the shares that partially reversed the falls. According to statistics collated by Bloomberg, the losses have destroyed roughly $5 billion in value across a variety of enterprises.
The market as a whole, which is expected to have its best week since June, provided a dramatic contrast to the unpleasant stretch for equities exposed to cryptocurrencies. Shares of companies like Hut 8 Mining Corp. and Coinbase Global Inc. could only halt their losses thanks to the broader rebound.
The cryptocurrency bear market of this year has destroyed trillions of dollars’ worth of value, highlighted by a roughly 75% decline in Bitcoin since its peak around a year ago. Since its launch in April, the iShares Blockchain and Tech ETF (IBLC) from BlackRock has lost 46% of its value due to this as well as a broader equity decline.
