The crypto plunges. Here are the most exposed stocks.

Bitcoin plunged amid whispers of a “crypto winter”.

The time of dreams

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Whispers of a “crypto winter” intensify, and stocks of crypto-exposed companies are caught in the carnage.

The price of Bitcoin – the proxy of the cryptocurrency space – is down more than 50% this year, exceeding the volatility that even crypto enthusiasts have come to tolerate. Amid the decline, few had been willing to acknowledge that the asset class is entering a so-called crypto winter, or an extended period of low prices. That changed this week after crypto lender Celsius suspended account withdrawals and the cryptocurrency exchange.

Coinbase Global

(ticker: COIN) announced that it was laying off almost a fifth of its staff.

But it’s not just cryptocurrencies that are seeing their prices fall, many surrogate stocks for crypto investing are also in decline, regardless of their level of exposure.

Among the publicly traded companies with the most exposure to the crypto markets is Coinbase. Stocks are down 80% this year, far outpacing Bitcoin’s decline. This shouldn’t come as a complete surprise to investors, as Coinbase said cryptocurrency volatility will affect its finances, meaning it will be profitable in good times and incur losses in bad times.

But Wall Street is downgrading on Coinbase: Analysts at JP Morgan Securities downgraded their rating on the stock to neutral from overweight on Tuesday and cut their price target on the stock to $68 apiece from $171.

Marathon Digital Backgrounds

(MARA)—Like Coinbase, Marathon’s fortunes are closely tied to fluctuations in cryptocurrencies. The crypto mining company has seen its shares drop around 80% this year.

MicroStrategy

(MSTR)—Although MicroStrategy is a business intelligence software maker, it borrowed money to invest in Bitcoin in an effort to hedge against inflation. As of March 31, the company held 129,218 Bitcoin coins, which were then valued at $5.9 billion. In light of Bitcoin’s decline, stocks are down 70%.

But it’s not just the companies with the most bitcoin exposure that have seen their stock prices plummet.

Nvidia

(NVDA)—NVIDIA has long been a popular proxy for cryptocurrency investors, as the chipmaker’s game cards are used to mine Ethereum. Although the company has historically acknowledged its correlation with crypto markets, it said it has “limited visibility” into the amount of demand for its graphics processing units driven by cryptocurrency mining.

Nvidia shares are down 46% this year and are trading around $158 each.

Financial firms – which had previously shunned cryptocurrencies – allowed customers to trade and hold crypto assets. Cryptocurrencies have yet to be a significant driver of financial results for many of these companies, but stocks rise and fall with crypto sentiment.

To block

(

SQ

)—As of March 31, Block held $365.5 million in Bitcoin. In its latest earnings report, Block acknowledged that revenue and gross profit from its Bitcoin business could fluctuate due to demand and price movements. Indeed, in its last quarter, 40% of the company’s revenue was related to Bitcoin, whereas a year ago cryptocurrency accounted for 70%.

Block shares are down 60% this year, reflecting Bitcoin’s decline as well as fears that

Apple

(AAPL) will further extend its tentacles into the payments space.

PayPal Credits

(PYPL)—Payments company PayPal has also seen its shares fall 60% this year due to crypto issues as well as fears of increased competition from Apple. PayPal recently started allowing users to transfer cryptos to other digital wallets and exchanges. But analysts are less enthusiastic about PayPal’s forays into cryptocurrencies, saying the company’s margins would be improved if reduced.

Robinhood Markets

(HOOD) – Robinhood was flying high last year as retail investors enthusiastically traded stocks, options and cryptos. This year, stocks are down 60%. Part of this is due to cryptocurrencies losing their luster, but the drop in share also reflects lower retail trading volume.

Robinhood’s first-quarter transaction-based revenue was halved from a year ago. The company noted a 73% drop in equity-based revenue, while options and cryptocurrency revenue fell nearly 40%. Over the past year, cryptocurrency typically accounted for around a quarter of Robinhood’s revenue, but 50% of revenue in Q2 2021.

Silvergate Capital

(SI)—Stocks are down 70% this year, strongly reflecting concerns about the crypto plunge, as the La Jolla, Calif.-based bank is known as a crypto-focused bank. Its digital customer base grew to more than 1,500 customers by the end of the first quarter, marking a 40% jump from a year ago.

Outside of payment companies, more traditional financial companies have dabbled in cryptos with mixed results.

Signature Bank

(

SBNY

)—The New York-based bank has seen its shares fall 45% this year, far exceeding the 20% of the

SPDR S&P Bank

ETF (KBE) in part due to exposure to crypto. The bank was the first FDIC-insured bank to launch a blockchain-based digital payment platform. It starts to look like a liability when the crypto is not in favor.

SVB Financial

(SIVB)—SVB shares are down 40% as the Silicon Valley-based bank has been hit hard by declines in IPOs and venture capital investments. SVB bills itself as the banker of the innovation economy, so a downturn in cryptocurrencies is a headwind.

Write to Carleton English at [email protected]

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