Shares of several trendy cryptocurrency proxy stocks—including Riot Blockchain (NASDAQ:RIOT) , LongFin, and the Bitcoin Investment Trust (OTC:GBTC) —dropped sharply on Monday morning, despite gains throughout the broader technology market.
Today’s slump in crypto stocks comes alongside noteworthy declines in several on the world’s most popular cryptocurrencies. Bitcoin has dropped more than 12% over the last 24 hours, while Litecoin has tumbled more than 13% and Dash has plummeted nearly 17%.
Ripple, a rapidly growing crypto that is controlled by a San Francisco-based startup, has lost more than 15% of its value within the past day (also read: What Investors Need to Know About Ripple, Bitcoin's Cryptocurrency Rival).
Monday’s volatility is nothing new for these booming cryptocurrencies, which frequently witness sudden gains and drops. Not all of these moves can be traced back to specific news, but recent concerns about regulation and demand in Asia do seem to be dragging cryptos down today.
According to several reports, China is planning to limit power use by some bitcoin miners, and South Korean is gearing up to regulate cryptocurrency exchanges and possibly institute a capital gains tax on crypto trading.
“The fuss about regulators tightening screws in South Korea is pushing the price of bitcoin,” Naeem Aslam, chief market analyst at TF Global Markets in London, told Bloomberg. “This and the Chinese news is going to bring a blip in the price.”
For trendy stocks like Riot, Longfin, and GBTC, volatility in the crypto market causes volatility in their own valuations. Shares of Riot were down more than 5% on Monday morning, Longfin dropped more than 7%, and GBTC fell about 8%.
These stocks are still up significantly over the past three months, but their unprecedented runs have now been replaced by massive day-to-day price swings. GBTC, which operates as a bitcoin holding fund and once regularly traded at a 100% premium to its bitcoin-per-share value, has now dropped nearly 40% from the highs it reached in mid-December.
Elsewhere, both Riot and Longfin are prime example of small-cap companies that have benefitted from adding blockchain technology to their business models. Just a few months ago, Riot was a dying biotech diagnostics equipment firm, while Longfin exploded after acquiring Ziddu.com, a blockchain research company working on decentralized solutions for lending and financing.
This trend has left many investors scratching their heads, but for those focused on the short-term trading of cryptocurrencies and related stocks, Monday’s movement is all in a day’s work.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>
BITCOIN INVT TR (GBTC): ETF Research Reports
Original post
Zacks Investment Research