Shares of Coinbase (COIN), the largest crypto exchange in the US, have faced significant declines during the first quarter (Q1) of the year, primarily due to escalating concerns about the US economy and its impact on digital assets.
Coinbase And Others Face Increased Volatility
According to Bloomberg, Coinbase’s stock has dropped more than 30% since the beginning of the quarter, marking its worst performance since the collapse of the FTX exchange in late 2022.
This decline is reflective of a broader trend affecting nearly all major crypto-linked stocks, including companies like Galaxy Digital Holdings (GLXY.TO), Riot Platforms (RIOT), and Core Scientific (CORZ).
The cryptocurrency market itself is experiencing turmoil, with Bitcoin (BTC) falling over 20% from its all-time high and Ethereum (ETH) plummeting more than 45% in value.
These shifts come amid President Donald Trump’s escalation of a “global trade war,” which has stirred fears about the health of the country’s economy. Economic data has exacerbated these concerns, pushing the S&P 500 Index (GSPC) toward its worst quarter since mid-2022.
Oppenheimer analyst Owen Lau noted that many within the cryptocurrency community recognize that the current market conditions are not primarily driven by fundamental factors. Instead, Lau emphasized that macroeconomic issues—such as tariffs and the potential trade war—are influencing investor sentiment significantly.
The looming threat of a recession has reportedly added to the unease, causing higher-risk crypto-linked stocks to be even more volatile than Bitcoin itself.
Lau explains that investments in companies like Coinbase carry additional risks, including the potential for bankruptcy, allegedly making them particularly susceptible to swift sell-offs.
Cryptocurrency Market Struggles To Rebound
The current state of the cryptocurrency market is a stark contrast to the optimism that prevailed at the start of the year, following Trump’s election. Bitcoin reached a record high of over $109,000 on Inauguration Day.
Earlier this month, Bitcoin prices fell after Trump announced a strategic reserve for the market’s leading crypto, but did not allocate taxpayer funds to expand it. As of now, Bitcoin trades around $83,000, still above pre-election levels but far from its peak.
While shares of various crypto-related companies surged following the election, Coinbase and crypto miners have since relinquished those gains. Notably, Michael Saylor’s Strategy (MSTR) is among the few stocks in the sector that has managed to remain in positive territory since November 5.
Despite the downturn, the cryptocurrency industry continues to gain influence in Washington and is moving closer to integration with traditional financial systems. However, this growing power has yet to translate into a market rebound.
Connor Loewen, a cryptocurrency analyst at 3iQ, expressed skepticism about the current state of investor sentiment, stating, “What we saw a couple of months ago, I don’t know how much crazier it can get than that. I think we’re going to have to be looking for new catalysts.”
Featured image from DALL-E, chart from TradingView.com
