Tesla, Coinbase lead drop in crypto-related stocks as bitcoin plunges

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

Michele Tantussi | AFP

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

Bitcoin, the world’s largest digital token, fell to nearly $ 30,000 at one point on Wednesday morning, according to Coin Metrics. The price fell by around 24%. (Any decrease in an asset or security by more than 20% is considered a bear market.)

The move comes after China banned financial institutions from conducting transactions related to crypto on Tuesday. Separately, a JPMorgan report showed that large institutional investors ditched Bitcoin in favor of gold.

Bitcoin’s decline this month has worsened a week ago after Tesla CEO Elon Musk apparently changed his mindset about crypto by saying the company would not mine Bitcoin due to environmental concerns related to crypto mining accept more than payment.

“You had a confluence of events … where you started to destroy the positivity of the price action and now we have a liquidation event,” Mike Novogratz, CEO and chairman of Galaxy Digital, told CNBC’s “Squawk Box.” “It won’t bounce back in a moment. It will solidify for a while.”

Crypto-related stocks are falling amid the bitcoin slide

Tesla, still a big bitcoin holder, fell around 4% on Wednesday morning. The micro-strategy, which made headlines by buying a significant amount of Bitcoin for their corporate coffers, gained 10%.

Coinbase, the newly public crypto exchange, was down nearly 9%. Bitcoin’s price approached $ 65,000 five weeks ago before it peaked around the time of Coinbase’s public debut.

Square and PayPal – which facilitate transactions in cryptocurrencies and have been big buyers – also fell 4% and 1.5%, respectively, on Wednesday morning.

Nvidia fell 2% after starting trading. The company makes chips used in crypto mining, but is reportedly trying to curb their use for this purpose.

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