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A drop in cryptocurrency-related stocks as a result of the decline in Bitcoin and the choppy debut of Coinbase Global Inc. is sparking a rally cry among optimists who deny fears that the sector has peaked.
A global basket of stocks curated by Bloomberg related to crypto trading or bitcoin mining has fallen 9% in the past week, up from 2021 to around 130%. A bitcoin slump over the weekend rocked crypto mania, but the token has reduced some losses since then and is up 690% over the past year.
“Validating the public market of Bitcoin and the entire range from Coinbase’s listing will encourage people who can invest in the markets,” said Jehan Chu, managing partner of crypto consultant Kenetic Capital in Hong Kong. There is evidence that retail investors have taken advantage of Bitcoin’s fall, he added.
Day traders also have stocks like bitcoin miner Marathon Digital Holdings Inc. and crypto broker Voyager Digital Ltd. which rose by at least 8,900% in the past year. For some, the $ 68 billion market value for digital token exchanges justifies Coinbase betting on a tipping point in the adoption of crypto. Others fear Bitcoin’s listing and spins are part of an unsustainable, stimulating frenzy.
“The passions are profound” regarding the near-term crypto outlook, “but dips are clearly supported,” Chris Weston, research director at Pepperstone Group Ltd., wrote in a note Monday.
Coinbase, the largest U.S. cryptocurrency exchange, closed at $ 342 on Friday and hit a high of $ 429.54 in the first minutes of its debut on April 14th. Marathon and Voyager lost about 20% last week.
On Monday in Asia, shares in companies like Japan’s Monex Group Inc., which owns a crypto exchange, and Woori Technology Investment Co., in which it has an interest a leading South Korean digital token broker – was in the red.
Still, analysts who have started reporting on Coinbase are optimistic and will see an average increase of 52% over the next year. The company’s chief executive officer, Brian Armstrong, described the listing as a shift in legitimacy for the entire cryptocurrency industry.
The fact that more sell-side analysts will be forced to look into the digital token sector is a positive development, according to Henri Arslanian, Global Crypto Leader at PwC in Hong Kong.
“It is now forcing the sell-side firms to cover Coinbase and Crypto in a more practical and detailed manner,” said Arslanian. “This not only brings more experience, but also more expertise in the asset class.”
Many pitfalls remain: the Bitcoin boom could turn into bankruptcy, and regulators stand ready to tighten scrutiny over digital tokens and related companies if they achieve greater mainstream adoption.
But for now, the cryptocurrency craze continues. For example, Dogecoin – a token created as a joke – almost tripled on Friday to a market value of around $ 50 billion. The demand was so brisk that investors trying to trade it on Robinhood crashed the site.
“It’s still early in the game,” said Dave Chapman, executive director of Hong Kong-based BC Technology Group Ltd., which operates the OSL digital asset platform. “Investors still have the opportunity to participate and secure a first mover advantage.”
– With the support of Nisha Gopalan and Joanna Ossinger
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