Sebastian Sinclair

Digital asset markets are reeling from revelations that top exchange Binance may soon gobble up its major rival FTX, causing havoc among crypto stocks.



On Coinbase, bellwether crypto bitcoin fell 15% to $17,500 on Tuesday afternoon, its lowest point in almost two years. Number-two ether dropped by 22% at its worst while Binance’s native token BNB shed 12%.&nbsp;



Most top tokens have recovered slightly since their local lows. Still, the crypto market has shaved 10% from its total capitalization over the past 24 hours, breaking below the $1 trillion mark and representing $100 billion in nominal losses.



More than 69% has been wiped from a peak of $2.97 trillion witnessed 12 months ago, with roughly $1.9 trillion lost year to date. By comparison, the bursting of the dot-com bubble at the turn of the century erased <a href="https://money.cnn.com/2000/11/09/technology/overview/" target="_blank" rel="noreferrer noopener">$1.7 trillion</a> from equities markets, although adjusted for inflation that figure would be closer to $3 trillion.



Most of the sources Blockworks spoke to agree — the past 24 hours have been “insane.”



Core Scientific, one of the largest publicly listed miners, plummeted nearly 16% on Tuesday, the worst hit among bitcoin mining stocks, followed closely by Hong Kong rival Bit Mining. Core Scientific did however regain 3% during pre-market trade on Wednesday.



Hut 8 Mining Group and Digihost Technology both tumbled 12%, while Marathon Digital gave up 5% and a further 5% in the early morning session.



Surprisingly, New York-based Stronghold Digital managed to brace the impact climbing 2% on the day to finish up at $0.83 per share. The stock has however given up those gains and then some this morning.



Coinbase, practically the only pure-play crypto exchange that’s publicly-listed, took a 11% hit on Tuesday and another 5% during pre-market. Robinhood, the controversial discount brokerage which also supports crypto trading, tanked 19% to $9.74 and remains somewhat steady leading into today’s session.



Both Coinbase and Robinhood have experienced shrinking trade volumes, <a href="https://cms.blockworks.co/robinhood-layoff-costs-q2-losses-wont-delay-crypto-product-launches/" target="_blank" rel="noreferrer noopener">contributing</a> to reductions in their workforces this year, alongside both crypto-native firms and tech giants.



For scale, the tech-heavy NASDAQ 100 rose nearly 1% on Tuesday while the broader S&amp;P 500 gained more than half a percent.



<h3>Crypto bank Silvergate hardest hit among digital asset stocks</h3>



Digital asset managers Galaxy Digital and Bakkt Holdings sank 17% and 2.5% respectively on the day, with the latter falling another 2% during pre-market.&nbsp;



Both stocks have slumped by about 80% of year to date. Digital asset financial services firm Eqonex, a nano-cap stock which shuttered its exchange operations in August, also dropped nearly 9% on the day to $0.40.



Galaxy, spearheaded by Wall Street maverick Mike Novogratz, is rumored to be cutting its workforce by 15% following a <a href="https://cms.blockworks.co/galaxy-digitals-stock-rises-despite-posting-555m-q2-net-loss/" target="_blank" rel="noreferrer noopener">$555 million net loss</a> posted for the second quarter. Galaxy’s third-quarter earnings call is slated for Wednesday at 8:30 am ET.



Crypto custodians Silvergate and Signature Bank each ended more than 22% and 4% in the red, now down 73% and 57% respectively this year. Silvergate was the worst performing crypto-related stock on Tuesday of the 50 Blockworks analyzed. It fell an additional 7% during pre-market.



San Diego-based Silvergate, which collects demand deposits from crypto infrastructure providers and exchanges, posted a loss of $13.5 million in third-quarter deposits <a href="https://www.forbes.com/sites/emilymason/2022/10/18/silvergate-stock-tumbles-as-3q-deposits-retreat-for-banker-to-crypto-exchanges/?sh=4ff4e6275902" target="_blank" rel="noreferrer noopener">compared to Q2</a>.



Software company (and pseudo bitcoin ETF) MicroStrategy wasn’t far behind, sliding 20.5% and another 8% before Wednesday’s open. MicroStrategy owns <a href="https://cms.blockworks.co/are-companies-aside-from-microstrategy-still-buying-bitcoin/#:~:text=With%20the%20purchase%2C%20MicroStrategy%20now,return%20a%20request%20for%20comment." target="_blank" rel="noreferrer noopener">130,000</a> BTC ($2.31 billion), acquired for nearly $4 billion at an average of $30,639 as of late September, putting its paper losses at around 40%.



Elon Musk’s automaker Tesla, which held 9,720 BTC ($172 million) per its latest disclosures, tumbled 3%, although it’s more likely the stock was impacted by Musk dumping <a href="https://www.bloomberg.com/news/articles/2022-11-09/musk-sells-3-95-billion-of-tesla-stock-after-twitter-takeover" target="_blank" rel="noreferrer noopener">$3.9 billion</a> in company stock following his buyout of social media platform Twitter.



The negative price action across crypto stocks amounted to hurting digital asset ETFs. Bitwise’s Crypto Industry Innovators ETF (BITQ), which is weighted considerably towards MicroStrategy, Coinbase and Silvergate, stumbled 10%.



<h3>Crypto industry caught off guard by FTX collapse</h3>



The volatility felt Tuesday is reminiscent of past events this year following a contagion that had gripped some of the industry’s largest lenders including Celsius Network and Voyager Digital — now undergoing bankruptcy proceedings.



With public <a href="https://twitter.com/LucasNuzzi/status/1590122590206824448?s=20&amp;t=1ROZBsSFtb3lAWV99IQopA" target="_blank" rel="noreferrer noopener">speculation mounting</a> over whether FTX <a href="https://twitter.com/AriDavidPaul/status/1590027413937090561?s=20&amp;t=L8h4QiopjfCJkEUoAerzLA" target="_blank" rel="noreferrer noopener">rehypothecated</a> client crypto to bail out its sister firm Alameda Research in Q2, investors are fleeing for the exit. Users have decided against the risk of keeping their crypto on FTX and have decided to <a href="https://www.coindesk.com/business/2022/11/08/ftxs-bitcoin-balance-plunges-to-just-one/" target="_blank" rel="noreferrer noopener">pull their funds</a>.



Despite the <a href="https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/?outputType=amp" target="_blank" rel="noreferrer noopener">leak</a> of Alameda’s alleged partial balance sheet late last week, most in the industry have been caught off guard. Developments have escalated quickly and within a few days FTX CEO Sam Bankman-Fried could soon be forced to sell.



Questions remain as to why FTX —- which was valued as much as $36 billion at its last funding round just nine months ago — is grasping at a bailout from its biggest rival. Proponents are now asking whether FTX <a href="https://twitter.com/AriDavidPaul/status/1590027413937090561?s=20&amp;t=L8h4QiopjfCJkEUoAerzLA" target="_blank" rel="noreferrer noopener">deployed</a> its customer and partner capital to fund other ventures.



“In general, it’s poor practice for exchanges to be utilizing their customers’ tokens for other purposes, which exposes said tokens to unnecessary risk,” CoinGecko’s co-founder Bobby Ong told Blockworks.



Exchanges should strive to have customer tokens fully custodied, with the totals and wallet addresses made transparent for public scrutiny, he said. “All crypto exchanges should do Merkle-tree <a href="https://cms.blockworks.co/news/what-are-proof-of-reserves-and-can-they-build-back-trust/">proof-of-reserves</a>,” Binance’s CEO Changpeng Zhao tweeted Tuesday. 



Read more: <a href="https://cms.blockworks.co/news/what-are-proof-of-reserves-and-can-they-build-back-trust/">What Is Proof of Reserves and Can It Build Back Trust?</a>



“Banks run on fractional reserves. Crypto exchanges should not.” The Binance head said his exchange would start to implement proof-of-reserves “soon” in an attempt to provide “full transparency.”



Tony Chapple, head of trading at Australian digital asset firm Zerocap, told Blockworks that the event will escalate consolidation through the crypto space, which he reckons had been on the cards for a while.



“Consolidation to firms with proven ability to control their balance sheet risk and employ economies of scale will be the long-term winners here,” Chapple said.



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FTX Contagion Hits Crypto Stocks Following Binance Buyout

David Canellis

<div id="highlights-block_62ab9431b5ebf" class="highlights">
 <ul>
 <li>Crypto contagion has spread into equities with digital asset exposure</li>
 <li>Short interest for multiple top crypto stocks has peaked this month</li>
 </ul>
 
</div>



Stock traders looking to profit from tumbling cryptocurrency prices took aim at major players in digital assets this week, with Coinbase and MicroStrategy among the hardest hit.



Short sellers Monday bet more than $631 million, cumulatively, on the continued descent of six top crypto stocks, accounting for 39% of their collective trade volume for the day.&nbsp;



Spot crypto markets shed 16% over the weekend, suggesting short sellers had eagerly awaited equity markets opening to capitalize on the chaos.



Top US crypto exchange Coinbase took most of the wrath, facing shorts of $393 million Monday — 74% above its yearly average, according to FINRA data compiled by Blockworks. FINRA tracks volume on both the NYSE and Nasdaq, but its data excludes private markets and could count short trades that don’t specifically convert to an open short.



The same day, Coinbase <a href="https://cms.blockworks.co/coinbase-cut-workforce-ceo-wary-of-potential-recession/" target="_blank" rel="noreferrer noopener">said</a> it would lay off almost one-fifth of staff: more than 1,000 employees. Chief executive Brian Armstrong cited a potential US recession. Coinbase shares have since fallen some 16% since Friday’s close.



Also on Monday, short sellers bet $124 million against MicroStrategy — the data intelligence firm run by bitcoin bull Michael Saylor.



MicroStrategy stock, on average, recorded $70 million in shorts daily over the past year, which means Monday saw 77% more MicroStrategy short selling than usual. The tech company’s shares are now down 25%.



MicroStrategy maintains the largest corporate bitcoin reserves of any public company, holding 129,218 BTC as of April, worth $2.7 billion today. The company’s market capitalization is just $1.8 billion.



New York-based Signature Bank saw an even bigger short surge. Through its crypto-specific Signet service, Signature <a href="https://seekingalpha.com/article/4512236-signature-bank-tumbles-with-crypto-mayhem-time-to-buy" target="_blank" rel="noreferrer noopener">oversees</a> $29 billion in crypto deposits (as of May), including $7 billion in stablecoins. Market participants including exchanges, miners, funds and fiat-backed stablecoins, such as Circle’s USD Coin (USDC) and TrueUSD, all bank with Signature.



Short sellers initiated around $53 million in bets against Signature Monday, 82% above its yearly average. The company’s shares went on to shed 20%.



<figure class="wp-block-image"><a href="https://lh3.googleusercontent.com/ZvW-6FF1BUE0KK8c-vaDHQWkR6sbf2TFD452xfVcrrAwd1hOKgIJHbA_NfCcouBWpjK2PQgrzf5EUcWDDRStLRKWuGIpYe0P0AmhPghmt336plyXhoR3Aqw2M4mefGtxrEC1duZQCGvRBMxUuQ"><img decoding="async" src="https://lh3.googleusercontent.com/ZvW-6FF1BUE0KK8c-vaDHQWkR6sbf2TFD452xfVcrrAwd1hOKgIJHbA_NfCcouBWpjK2PQgrzf5EUcWDDRStLRKWuGIpYe0P0AmhPghmt336plyXhoR3Aqw2M4mefGtxrEC1duZQCGvRBMxUuQ" alt=""/></a><figcaption>Short selling volume over the past year | Data source: FINRA via TradingView</figcaption></figure>



The mounting losses are despite the bank having “virtually zero credit risk” via its crypto operations, as its digital asset balance sheet is almost entirely deposits, according to a <a href="https://seekingalpha.com/article/4512236-signature-bank-tumbles-with-crypto-mayhem-time-to-buy" target="_blank" rel="noreferrer noopener">recent</a> analysis.&nbsp;



Rival Silvergate, on the other hand, on Monday only saw 14% more shorts than average, or roughly $24 million. Silvergate <a href="https://ir.silvergate.com/news/news-details/2022/Silvergate-Capital-Corporation-Announces-First-Quarter-2022-Results/default.aspx" target="_blank" rel="noreferrer noopener">oversaw</a> about $15.8 billion in assets under management as of March 31, the most recent available data — making the firm one of the largest crypto banks.&nbsp;



In February, the firm spent $182 million to acquire assets and technology once intended to power Meta’s failed stablecoin offering Diem. Silvergate also issued a $205 million bitcoin-backed <a href="https://www.businesswire.com/news/home/20220329005397/en/Silvergate-Bank-Issues-205-Million-Loan-to-MacroStrategy-Collateralized-by-Bitcoin" target="_blank" rel="noreferrer noopener">loan</a> to MicroStrategy in March. Its share price is also down 20% since Friday’s close.



Curiously, crypto mining stocks weren’t targeted to the same degree. US-listed outfits Marathon Digital and Riot Blockchain recorded $27 million and $10 million worth of shorts on Monday, respectively, both significantly under their yearly daily averages of $53 million and $67.5 million.&nbsp;



<h3>Short sellers could target crypto mining stocks next</h3>



Shorting specialists might not be focusing on top miners just yet, as those companies are, at least in theory, large enough to acquire fresh mining rigs and electricity sources relatively cheaply, bitcoin mining consultant Alejandro De La Torr told Blockworks.&nbsp;



It could put some public crypto miners in a better position than some of their smaller, unlisted counterparts, at least in the short term. Todd Esse, co-founder of bitcoin mining fund HashWorks, told Blockworks he expects shorters will target certain vulnerable mining stocks moving forward.



In any case, short interest — a measure of how many outstanding shares are attributable — for nearly all these stocks are now at yearly highs, according to data from finance and blockchain analytics startup quantX.



MicroStrategy&#8217;s short interest hit 30% in May (3.4 million shares of 11.30 million outstanding), but has since dropped slightly. Signature Bank shorts have surged: Its short interest is up 60% month over month, now at 2.57 million shares of almost 63 million outstanding.



“Pure bitcoin plays have slightly declined in short interest, whereas broader crypto plays have spiked this month,” quantX co-founder Oisin Maher said. The short interest in cryptoasset manager Voyager Digital’s US-listed equity, in particular, has exploded some 600% in June, while Galaxy Digital’s has been steadily growing all year.&nbsp;



<figure class="wp-block-image is-resized"><a href="https://lh6.googleusercontent.com/ko7Hp-Hp--Df_JFT8Kbn2XML73c3YN0Sr30S7I7bpjNCdFu0CACJmrsP7OSX53eVK45c-zjbfyez9YOBTtQ6c01hIsQwx15p2Q7kAGqDltq2EDk54WB7pCx5O1Bd5NcmDIlzWr3p7AEMKfEkXQ"><img decoding="async" loading="lazy" src="https://lh6.googleusercontent.com/ko7Hp-Hp--Df_JFT8Kbn2XML73c3YN0Sr30S7I7bpjNCdFu0CACJmrsP7OSX53eVK45c-zjbfyez9YOBTtQ6c01hIsQwx15p2Q7kAGqDltq2EDk54WB7pCx5O1Bd5NcmDIlzWr3p7AEMKfEkXQ" alt="" width="840" height="415"/></a><figcaption>Coinbase short interest over the past year | Source: quantX via Bloomberg Terminal</figcaption></figure>



Top crypto stocks have already booked more short volume in June than last September — when bitcoin was worth more than double its current price.&nbsp;



Still, FINRA data shows far more bets on crypto’s demise last month, which saw the Terra ecosystem implode and lending platform Celsius begin to falter.&nbsp;



Indeed, altogether in May, more than $11 billion worth of shorts were opened against Coinbase, MicroStrategy, Signature, Silvergate, Marathon and Riot — almost 70% levied at Coinbase.&nbsp;



Short sellers only logged more bets against these crypto stocks at one other time throughout the past year; October and November together saw more than $19 billion worth of shorts opened, when bitcoin was just retreating from its $69,000 record high.



The total value of all cryptocurrencies has tanked 65% since then — indicating there’s some very happy short sellers out there. Recent <a href="https://money.yahoo.com/crypto-stock-short-sellers-raked-in-4-billion-this-year-134004038.html" target="_blank" rel="noreferrer noopener">data</a> shows they&#8217;ve raked in almost $4 billion by shorting crypto stocks this year.



This article was updated at 5:07 am ET, Jun 17 to include reference to Silvergate&#8217;s loan to MicroStrategy.



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Short Sellers Are Betting Big Money on Cryptocurrency’s Demise

<div id="highlights-block_62797ac6dfb8f" class="highlights">
 <ul>
 <li>Bitcoin’s price has tracked blue chip tech stocks such as Apple, Amazon and Microsoft all year</li>
 <li>The recent market downturn has only strengthened that correlation</li>
 </ul>
 
</div>



Nearly $240 billion has been wiped from crypto markets since Friday as the macro headwinds weighing on digital assets intensify.&nbsp;



Bitcoin fell 15%, from $36,000 to trade around $30,700 at press time. Ether and XRP, respectively, shed 14.5% and 18%, while Solana&#8217;s SOL and binance coin were the hardest hit of the top cryptocurrencies – both dropping 19%.



Overall, crypto is now worth $1.4 trillion (a touch less than Alphabet’s market capitalization), having lost 15% over the weekend to its nadir since July 2021.&nbsp;



Crypto stocks also took a beating. Top mining stock Marathon Digital slumped 17% Monday; Coinbase tanked 18%; and MicroStrategy crumbled nearly 25% — which collectively equates to more than $5.4 billion in shareholder losses.



But sour crypto markets echo poor performing equities across the board. The S&amp;P 500 dropped 2.5% as markets opened, and the tech-heavy NASDAQ 100 sank 3.5%.



The S&amp;P and NASDAQ have now respectively lost 16% and 26% year to date. For scale, cryptocurrencies’ total value collapsed more than 35% over the same period, according to TradingView data compiled by Blockworks.



Indeed, crypto and equity markets are increasingly correlated, particularly with tech stocks, as bitcoin’s price has tracked blue chip tech stocks such as Apple, Amazon and Microsoft all year.



And little has changed in the most recent downturn. In fact, correlation is tightening.&nbsp;



“Right now, correlations are appearing across and within most asset classes, not just crypto,”  Beimnet Abebe, vice president of principal trading at <a href="https://www.galaxydigital.io" target="_blank" rel="noreferrer noopener">Galaxy Digital</a>, told Blockworks. 



Recent significant changes to monetary policy, Abebe said – on top of the highest inflation rates in a generation – have put pressure on crypto and other assets following a time of “extremely loose” federal bank quantitative easing-friendly regimes.&nbsp;



“Over the long run, we will see a decoupling of cryptoassets as tokens mature and develop all with their own idiosyncratic features,” Abebe said.



<h3>Crypto capitulation breeds innovation</h3>



But what will it take to see crypto actually decouple from tech stocks?&nbsp;



David Nage, portfolio manager at crypto investment firm Arca, told Blockworks it might take full capitulation.



Nage reasoned that a previous de-pegging of correlations between digital assets and tech stocks happened after March 2020, when both equity and crypto markets spiraled due to the pandemic becoming a black swan event.



Crypto markets took off in April, May and June of 2020 while tech stocks were still finding their footing. Many attributed those surges to widespread lockdowns, with day traders tapping digital assets with their stimulus checks.&nbsp;



So, it stands to reason that a rebound in crypto markets might be triggered once we see more experimentation across DeFi and gaming and decentralized finance (GameFi), according to Nage.



“I definitely believe the way that digital assets will potentially de-peg from its correlation with equities will be to attract interest, and it’s new platforms and innovation that create that,” he said.



But Nage isn’t seeing tremendous innovation in DeFi (decentralized finance). Instead, he’s mostly witnessing copy-paste projects that mimic Ethereum-powered DeFi projects that were popular in 2020: decentralized exchanges and automated market makers.



“What we’ve seen from past crypto winters, especially during 2018, is that there will be a period of time when innovation starts, when founders start to buckle down – they start building platforms that garner our attention and use-cases rather than raising funds every three months,” he said.



Nage pointed to three crypto companies that raised money through the last big “crypto winter”: Fireblocks, OpenSea and Blockdaemon. These are “formative pieces of infrastructure that have made a lot of things possible today,” he said.&nbsp;



<h3>Crypto can still become a tool to battle inflation</h3>



If other layer-1 chains have been hotbeds for innovation, why does the market still follow bitcoin?



“Bitcoin is the most liquid of all cryptoassets, so that’s where institutions are focusing their energy, making it likely to lead crypto market sentiment for the foreseeable future,” Galaxy’s Abebe said.



But crypto proponents once claimed digital assets could serve to hedge against growing inflation and even diversify portfolios. Bitcoin’s losses have instead amplified inflation over the past year, while crypto’s high correlation with tech stocks means digital assets serve as pseudo-leveraged bets on the world’s largest companies.



To Nage, the problem of inflation is now staring us in the face. It’s something that multiple generations haven’t had to deal with before. He envisions a period of adjustment which will birth new playbooks, guided by reviewing what we did before to curb inflation, “and that will take some time.”



“At the end of the day, our generation alongside newer generations are always going to be incredibly interested in digital assets and technology,” Nage said. “We’re the mobile-native, crypto-native generation – games, mobile devices, the internet, this is what we know.”



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Crypto Is More Correlated With Tech Stocks Than Ever – How Do We Decouple?

Ben Strack

<div id="highlights-block_6261888fcedd1" class="highlights">
 <ul>
 <li>Coinbase, Voyager Digital, Marathon Digital stocks have plummeted in 2022, far beyond declines of bitcoin and ether</li>
 <li>The marked deviation comes as major cryptocurrency exchanges, including Coinbase, are prioritizing diversifying revenue streams away from trading fees</li>
 </ul>
 
</div>



Though bitcoin, ether and other cryptocurrencies have dipped so far this year, digital asset stocks have seen even steeper — often record — declines.



What companies may do to combat losses — if they even can — remains to be seen.



Coinbase’s stock is down roughly 45% year to date. Voyager Digital is down about 65% in 2022, meanwhile, Galaxy Digital has slipped 29%.



Most crypto stocks have historically traded as a proxy for cryptoassets themselves — especially mining companies — calling into question the current lack of correlation, according to Lionel Rebibo, CEO of crypto index trading platform Trakx.



“As the cryptoassets experienced heavy outflows, so did crypto stocks,” Rebibo told Blockworks. “The move on the stocks was probably exacerbated by the fact that they were quite often grossly overvalued.”



Bitcoin traded around $42,200 at noon ET Thursday, according to data compiled by Blockworks — down roughly 12% since the start of the year. Ether has dropped 18% to about $3,100 over that span.



The steep price fluctuations have led to lower crypto trading volumes so far this year, according to Chris Allen, an analyst at Compass Point Research and Trading.



A pullback from retail investors — impacting companies that derive the bulk of their revenue from trading fees — has led to institutional de-leveraging, affecting Coinbase and Galaxy, Allen added.



Despite clearer regulatory guidance, including <a href="https://cms.blockworks.co/bidens-crypto-executive-order-may-be-watershed-moment-despite-lack-of-specifics/" target="_blank" rel="noreferrer noopener">President Biden’s executive order</a> mandating government agencies study digital assets, the industry expects no major changes anytime soon, he said.



<h3>Coinbase provides a proxy for the market</h3>



Cathie Wood, CEO and chief investment officer of ETF manager Ark Invest, said during the <a href="https://cms.blockworks.co/crypto-and-tradfi-collide-at-miami-etf-conference/" target="_blank" rel="noreferrer noopener">Exchange ETF Conference</a> in Miami last week that the disconnect between digital asset company valuations and stocks has continued to widen at a rapid clip.



She pointed to Blockchain.com’s funding round last month that boosted its valuation to $14 billion, up nearly threefold from $5.2 billion last March. At the same time, Wood said, Coinbase plummeted 40% to all-time lows, adding that the drop “makes no sense.”



Coinbase declined to comment for this story, but executives at the company addressed its stock decline during a February earnings call. Chief Financial Officer Alesia Haas said then the stock had traded in tandem with digital assets.



“We honestly don’t truly understand this, as this correlation does not take into account the growth in our market share, the diversification of our business beyond investing and let alone the future potential of our business as we expand into new assets and new product streams,” Haas said at the time.



Though transaction revenue still accounts for the majority of the exchange’s revenue, the company generated more than $500 million in subscription and services revenue last year — a tenfold increase from 2020 — including $214 million during the fourth quarter, shortly after Coinbase launched its trading service that imposes transactions fees in exchange for a monthly payment.



Coinbase <a href="https://cms.blockworks.co/coinbase-unveils-its-social-nft-marketplace/" target="_blank" rel="noreferrer noopener">this week unveiled</a> the beta of its NFT marketplace that resembles an Instagram-like social media platform.



“The messaging from companies is that there will be periods of high and low activity and that they are building for the long term,” Allen said. “[Coinbase] is investing heavily, which is why we expect them to operate at a loss this year and next.”&nbsp;&nbsp;



Voyager’s decline comes as the company reported estimated total first quarter revenue of roughly $100 million — down from $165 million the previous quarter. Its users grew from 3.2 million to 3.5 million in the first three months of the year, trailing analyst expectations.



<h3>Miners’ tie to crypto prices, tech stocks&nbsp;</h3>



Crypto miner equities have also dropped. Marathon Digital is down 38% since the beginning of the year, while Riot Blockchain dropped 40% over the same period.



Many investors peg Marathon Digital, which owns roughly 9,400 bitcoins, as a proxy for the price of the cryptocurrency, according to Charlie Schumacher, vice president of corporate communications.



“While we often do trade with bitcoin, we are also correlated with the Nasdaq, which is down 15% year to date,” Schumacher told Blockworks. “If investors reallocate their portfolios and go ‘risk-off,’ they go risk-off across the board, and that impacts large bitcoin miners like us.”



Marathon is working to deploy 23.3 exahashes — a measure of power supply that impacts mining speed — of computing power by early next year.



Though the company is looking to launch a research lab and an incubator, Schumacher said bolstering its bread-and-butter of mining remains Marathon’s priority.



There’s skepticism among industry participants about miners’ lofty growth targets, including Marathon’s goal to increase hash rage 500% in just over a year, he added — calling it “very much a prove-it to me moment for the industry.”



Overall, Rebibo said he doubts that crypto companies can do much in the short and medium terms to counter stock price falls when cryptoasset prices drop.



“When a company is clearly tagged in a certain sector, its stock will strongly reflect the fundamental drivers of this sector — whatever the company does to differentiate itself,” he said.&nbsp;



Spokespeople for Voyager and Galaxy declined to comment on stock price. A representative for Riot Blockchain did not return a request for comment.



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Crypto Declines Outpaced by Plummeting Digital Asset Stocks

<div id="highlights-block_61eb36bba2579" class="highlights">
 <ul>
 <li>The iShares Blockchain and Tech ETF would track the NYSE FactSet Global Blockchain Technologies Index</li>
 <li>BlackRock CEO Larry Fink said in October he sees “huge opportunities” for digital currency</li>
 </ul>
 
</div>



The world’s largest asset manager has an ETF in the works that would focus on blockchain technology.&nbsp;



The filing comes as crypto markets have cratered, with bitcoin dropping 10.8% to $36,900 as of Friday evening. The iShares Blockchain and Tech ETF would track the investment results of the NYSE FactSet Global Blockchain Technologies Index, according to <a href="https://www.sec.gov/Archives/edgar/data/1100663/000119312522014777/d286885d485apos.htm">a Friday regulatory disclosure</a>.



The index consists of companies involved in the development and deployment of crypto technologies in the US and abroad.



The proposed fund plans to invest at least 80% of its assets in stocks included in the index, according to the filing. It may allocate up to 20% in futures, options, swap contracts, cash and cash equivalents — all on equities. The fund will not invest in crypto directly or indirectly via crypto derivatives.&nbsp;



The disclosure did not indicate a ticker or expense ratio for the planned offering.&nbsp;



A spokesperson for the company declined to comment beyond the filing.&nbsp;



Investors have clamored for ETFs with ties to crypto in <a href="https://cms.blockworks.co/when-will-the-sec-approve-a-spot-bitcoin-etf/">the absence of a spot bitcoin ETF</a>. The largest such offering on the market is Amplify Investments’ Transformational Data Sharing ETF (BLOK), which has grown to $1.1 billion of assets since its January 2018 launch.



“iShares filing for a blockchain ETF was inevitable given their focus on mega-trends and that the universe of companies continues to expand,” Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA, said in a Twitter post.&nbsp;



BlackRock has nearly 400 iShares ETFs trading in the US, with combined assets under management of roughly $2.4 trillion. The firm’s total AUM totals about $10 trillion.



The asset manager revealed in January 2021 that its Strategic Income Opportunities Fund (BASIX) and its Global Allocation Fund (MDLOX) <a href="https://cms.blockworks.co/which-mutual-funds-etfs-are-making-crypto-related-investments/">could invest</a> in cash-settled bitcoin futures traded on commodity exchanges registered with the Commodity Futures Trading Commission (CFTC).



CEO Larry Fink <a href="https://cms.blockworks.co/blackrock-ceo-sees-huge-opportunities-in-digital-currency/">told CNBC in October</a> that while he sees “huge opportunities” for digital currency, he is unsure how the crypto space will fare over the long term.&nbsp;



<a href="https://cms.blockworks.co/blackrock-ceo-clients-not-asking-about-crypto/">In a July earnings call,</a> Fink told investors that he believed crypto could one day become an asset class, but long-term investors were not asking the firm about crypto’s fit in their portfolios.



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