Shares of cryptocurrency-linked companies fell Friday as investors pulled back from the sector after an initial rally sparked by progress on US digital asset legislation faded amid renewed concerns about crypto prices and broader macroeconomic risks.
Shares of Coinbase Global (COIN) dropped 7.6% after climbing more than 5% in the previous session, while Robinhood Markets (HOOD) fell roughly 3.8% following a gain of more than 5% on Thursday.
Shares of Strategy (previously known as Microstrategy) MSTR, which often trade as a leveraged proxy for Bitcoin, also fell roughly 6% Friday after rallying sharply a day earlier.
Analysts said Friday’s declines likely reflected profit-taking after Thursday’s rally, combined with investor caution surrounding geopolitical tensions in the Middle East and continued volatility in cryptocurrency prices.
Bitcoin retreated nearly 3% over the past 24 hours to around $79,000, while Ethereum fell approximately 3% to near $2,200.
Crypto-related equities had surged Thursday after a key portion of the Digital Asset Market Clarity Act advanced through the Senate Banking Committee, moving the legislation closer to a full Senate vote.
Regulatory optimism fades after initial rally
Thursday’s gains across crypto-related stocks were largely driven by optimism that Washington was moving closer to approving clearer digital asset regulations.
The Clarity Act advanced after lawmakers reached a compromise surrounding stablecoin-related yield payments.
The agreement prohibits yield on idle stablecoin deposits while allowing “rewards” tied to customer usage of dollar-pegged digital coins.
Analysts noted that support from Democratic senators Ruben Gallego and Angela Alsobrooks was viewed as especially important because the legislation will require bipartisan backing to overcome a filibuster.
Still, uncertainty surrounding the final form of the legislation continued weighing on sentiment Friday.
“Several outstanding issues remain unresolved,” Benchmark Equity Research analyst Mark Palmer wrote in a note.
Palmer pointed specifically to ongoing disagreements over proposals that would restrict President Donald Trump and his family from profiting from cryptocurrency-related businesses.
Despite those concerns, Palmer maintained an optimistic longer-term outlook for the sector.
“Washington is now materially closer to passing legislation that could reshape the trajectory of the American digital asset ecosystem for years to come,” he said.
Coinbase pressured by earnings concerns and Bitcoin weakness
Coinbase shares were also weighed down by renewed scrutiny surrounding the company’s recent financial performance.
The crypto exchange operator reported a net loss of approximately $394 million during the first quarter, while profit margins declined from 22.1% to 12.7%.
Revenue for the quarter totaled about $1.41 billion, below analyst expectations of roughly $1.48 billion.
Management also noted that total crypto market capitalization and trading volumes had declined more than 20% quarter over quarter, leaving the company highly sensitive to movements in Bitcoin prices and trading activity.
Some analysts additionally warned that technical trading patterns in Bitcoin could signal a broader consolidation phase for crypto assets and related stocks.
Robinhood data shows broader platform growth
Robinhood shares declined alongside the broader crypto sector despite reporting stronger April operating metrics.
The brokerage company said equity daily average trades rose 23% year over year, while options trading activity increased 7%.
Total platform assets climbed 49% from a year earlier to approximately $345.4 billion, supported by roughly $6 billion in net deposits during April.
Robinhood’s funded customer base also grew 7% year over year to 27.6 million users.
While crypto daily average trades declined compared with both the prior month and year-earlier period, total crypto notional trading volumes increased 38% year over year when including activity from Bitstamp.
