As Billions Of Dollars Flowed Into Bitcoin ETFs, Crypto Stocks Like MicroStrategy, Coinbase Got Left Behind In The Dust

Stocks that offer investors exposure to Bitcoin BTC/USD have experienced a downturn following the apex cryptocurrency’s price drop to levels below $41,000, despite initial enthusiasm surrounding the introduction of spot crypto exchange-traded funds (ETFs) in the United States.

Companies holding significant Bitcoin assets, including MicroStrategy Inc MSTR and Coinbase Inc COIN, have seen their stock prices fall over the last month. 

These equities provide a way for investors to gain exposure to cryptocurrencies without direct investment in such digital assets. However, with Bitcoin’s value under pressure, the impact has spilled over to related stocks.

Crypto Stocks Take A Hit

Between December 24 and January 24, 2024, MicroStrategy observed a 25% decrease in its stock value, with shares falling to $450.99. On January 10, the Securities and Exchange Commission (SEC) greenlit the introduction of spot Bitcoin ETFs, which led to the debut of nine fresh funds in the marketplace. The company, known for its substantial Bitcoin holdings of 189,150 BTC, presently has a cryptocurrency portfolio valued at $7.5 billion.

During the same time frame, Coinbase, the U.S. cryptocurrency exchange possessing 9,480 BTC in reserves, saw its share price decline by 29% since its initial public offering in 2021. As of the latest report on Wednesday, the shares were trading at $121.34.

Stocks in the mining sector, which usually rally alongside the crypto market, have not been spared.

Riot Platforms RIOT, a Bitcoin mining company holding over 7,358 Bitcoin, plummeted over 41% over the past month, with its stock hovering just above $10.

Marathon Digital Holdings Inc. MARA, another company that specializes in cryptocurrency mining and has a holding of 13,716 BTC, experienced a 38% decline in its stock price, tumbling from $26 on December 26 to $16 by Wednesday, January 24.

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Bitcoin Struggles To Find Footing

Despite the launch of several Bitcoin ETFs this year, Bitcoin’s price has not found strong footing. Bitcoin is down over 5% since the beginning of the year, 2024.

The trading volume for Bitcoin spot ETFs, including products from BlackRock, Grayscale, Fidelity, Ark Invest/21Shares, Bitwise, and several others reached a combined over $20 billion on Tuesday, data from Yahoo Finance shows.

New Bitcoin ETFs Attract Billions 

According to a JPMorgan Chase & Co. report, the nine fresh funds garnered approximately $270 million in inflows on Wednesday. When considering the outflows from Grayscale Investment's spot Bitcoin ETF, the day’s net net outflows amounted to about $153 million. This marks the third day in a row that the combined ten funds have experienced net withdrawals, with outflows originating solely from Grayscale’s Bitcoin Trust, which transitioned to an ETF after receiving the green light from the US Securities and Exchange Commission.

Since their inception, the nine new ETFs have amassed $5.2 billion in inflows, which has provided a counter to the $4.4 billion moving out from GBTC.

Analysts Remain Optimistic

In a note published on Thursday, Deutsche Bank analysts Marion Laboure and Cassidy Ainsworth-Grace shared that they anticipate Bitcoin’s value will increase over the year but cautioned investors with a clear message: “not to conflate price gains with broader predictions of cryptocurrency overtaking traditional finance.”

They further commented on the regulatory landscape, stating, “For now, the spot Bitcoin ETF approval opens a new chapter for Bitcoin prices, though volatile conditions are likely to persist.”

Photo: Roy Buri from Pixabay.

Price Action: At the time of writing, Bitcoin was trading at $40,060 up 0.52% in the last 24 hours, according to Benzinga Pro.

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