Bitcoin’s big drawdown is akin to big tech stocks
The journey Bitcoin (BTC) has made in the past 12 months alone is enough to fill an encyclopedia. Today, with BTC selling out again, I wanted to delve deeper into the May slump that hit record highs shortly after rising. That, combined with the overarching cryptocurrency frenzy that gripped Wall Street from late 2012 and up until now, has kept Bitcoin – and Cryptocurrency platforms as Coinbase Global Inc (NASDAQ: COIN) – ripe in the headlines.
In fact, on Wednesday May 19, Bespoke posted in its Morning Lineup a comparison of Bitcoin’s drawdowns against mega-cap technology. One of the biggest discoveries was comparing the cryptocurrency’s drawdown to the largest S&P 500 Index (SPX) Stocks such as Apple Inc (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ: MSFT). Bespoke found that the average drawdown on Bitcoin was significantly higher than that of the tech giants, with the exception of Amazon.com (NASDAQ: AZMN) and Alphabet Inc (NASDAQ: Goog)that were bigger or in the same ballpark.
BTC plunged 30% to a low of $ 30,001.51 on Wednesday May 19th. This sell-off started the week before when Tesla Inc (NASDAQ: TSLA) CEO Elon Musk – an avid investor in the cryptocurrency – tweeted that his company will no longer accept Bitcoin as a way to buy its vehicles. It wiped more than $ 300 billion from all cryptocurrency in the same day, according to CNBC, though Musk later made it clear that the electric car maker would not sell its Bitcoin holdings.
While Bitcoin recovers from Wednesday’s slump to a four-month low, the Coinbase Global cryptocurrency exchange has seen its own jump. The positive price action came after Wedbush on the 20th, the company discovered that the company had a first mover advantage as well as more crypto assets on its platform, allowing cryptocurrencies to become part of the payments ecosystem.
As previously mentioned, Coinbase Global shares fell to an all-time low of $ 208 on Wednesday, May 19, in response to Bitcoin’s sharp sell-off. The stock first went public in mid-April with an initial public offering (IPO) price of $ 250, but has been trending down since then. In the year to date, COIN has shrunk by 22%.
It’s too early to estimate where Coinbase will head from here. However, with Wedbush’s support and an uproar about the cryptocurrency in almost all the media, I wouldn’t be surprised if equity continued to recover, no matter how volatile Bitcoin’s path is.
Bernie Schaeffer’s subscribers Chart of the week received this comment on Sunday May 23rd.