Tesla, Coinbase Takes Crypto-Related Stocks Down As Bitcoin Drops

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 fell more than 30% to $ 30,001.51 at its low for the day from the session, its lowest level since late January, according to Coin Metrics. The price last fell 14% to $ 37,210.89 as of 11:00 a.m. ET. The cryptocurrency has halved since it hit an all-time high of over $ 64,000 in mid-April.

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.

“You had a confluence of events … where you started to break the positive price trend and now we have a liquidation event,” Mike Novogratz, CEO and chairman of Galaxy Digital, told CNBC’s “Squawk Box.” “It’s not going to spring back right away. It will solidify for a while.”

Crypto-related stocks are falling amid the bitcoin slide

Bitcoin’s decline this month worsened a week ago after Tesla CEO Elon Musk apparently changed his mindset about crypto by saying the company would stop Bitcoin because of environmental concerns related to crypto mining accept as payment.

Musk later on Wednesday morning stated that Tesla was not selling its bitcoin while the cryptocurrency was sinking. Tesla fell 4% on Wednesday morning.

The micro-strategy, which made headlines by buying a significant amount of Bitcoin for their corporate coffers, gained 9%.

Coinbase, the newly public crypto exchange, fell 7% after it started trading. The website appeared to be unavailable to some users on Wednesday morning.

Bitcoin’s price approached $ 65,000 five weeks ago before peaking around the time of Coinbase’s public debut.

“Coinbase’s trading debut coincides with the peak of Bitcoin, and many traders cannot make a compelling argument that it has since been able to make up for all of those losses,” said Edward Moya, senior market analyst at OANDA.

Square and PayPal – which facilitate cryptocurrency transactions and have been big buyers – also fell 3.3% and 0.8%, respectively, on Wednesday morning.

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

The Grayscale Bitcoin Trust, the popular trust that holds a large amount of Bitcoin, was down 11% on Wednesday morning.

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– CNBC’s Michael Bloom contributed to the coverage.

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