US Crypto-Linked Shares Plunge Amid Bitcoin Drop

(Reuters) – U.S.-listed shares of crypto-linked companies slumped as bitcoin fell more than 15% on Monday, following weak economic data last week that triggered fears of a recession and led to a frenzied sell-off of risky assets.

The plunge represents a significant reversal for the sector, which had recently enjoyed optimism due to the approval of exchange-traded funds (ETFs) tied to the spot prices of bitcoin and ether, the two largest cryptocurrencies.

Republican presidential candidate Donald Trump’s pro-crypto speech at a bitcoin conference last month had also bolstered sentiment, but data revealing higher unemployment and weak manufacturing activity weighed on risky assets.

“We are not surprised by Bitcoin’s snap reaction as the only weekend traded market. We don’t see any incremental negatives for crypto here,” Bernstein analyst Gautam Chhugani noted.

Chhugani added, “The bitcoin and crypto market will likely trade off macro and election cues for most of the third quarter.”

Crypto miners CleanSpark (NASDAQ:CLSK), Bitfarms, Riot Platforms (NASDAQ:RIOT), and Marathon Digital (NASDAQ:MARA) dropped between 12% and 25% during early trade.

Coinbase (NASDAQ:COIN) shares fell by 18%, while bitcoin buyer MicroStrategy declined nearly 23%.

Bitcoin has tumbled to its lowest point in nearly six months, while ether plunged 19%, reaching levels not seen since January.

Bitcoin Over ETFs

The growing correlation with equities has undermined bitcoin’s image as a safe-haven asset. However, some analysts suggested that direct investment in cryptocurrencies is preferable to exposure through proxies like ETFs and crypto-related stocks.

“If this weekend serves as a reminder of anything, it is the importance of investing in digital assets directly on native crypto exchanges,” said Joshua Peck, founder of crypto hedge fund TrueCode Capital.

“While others were stuck waiting for the futures market to open on Sunday night, we were calmly executing our strategy without interruption,” he added.

Despite this, others urged caution.

“It’s a big reminder that bitcoin and crypto in general are risk assets and sit at the pointy end of the risk spectrum,” said Tony Sycamore, market analyst at IG.