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

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

Michele Tantussi | Reuters

Cryptocurrency related stocks led by Tesla and Coinbase dropped on Wednesday as bitcoin plunged the equivalent of a bear market in just a single day.

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

The move comes after China on Tuesday barred financial institutions from conducting crypto-related transactions. Separately, a JPMorgan report showed large institutional investors were dumping bitcoin in favor of gold.

The pullback this month in bitcoin intensified a week ago after Tesla CEO Elon Musk appeared to change his tune a bit on crypto by saying the company would stop accepting bitcoin for payment because of environmental concerns surrounding crypto-mining.

“You had a confluence of events…where you started breaking down the positivity in the price action, and now we’ve got a liquidation event,” Galaxy Digital CEO and Chairman Mike Novogratz told CNBC’s “Squawk Box.” “It’s not going to bounce right back. It’ll consolidate for a while.”

Tesla, still a large holder of bitcoin, fell roughly 4% Wednesday morning. Microstrategy, which made headlines by buying a significant amount of bitcoin for its corporate treasury, tanked by 10%.

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

Square and PayPal — which facilitate transactions in cryptocurrencies and have been big buyers — were also lower 4% and 1.5%, respectively, Wednesday morning.

Nvidia ticked down 2% after trading began. The company manufactures chips used in crypto-mining, but reportedly trying to curb their use for that purpose.

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