Coinbase And MicroStrategy Feeling Left Out Following BTC ETF Approval

Equities linked to Bitcoin exposure recently witnessed a substantial decline with this downturn following the initial excitement surrounding the introduction of cryptocurrency exchange-traded funds (ETFs) in the United States. Despite the launch of several Bitcoin ETFs in 2024, the price of BTC has not stabilized, down over 5% since the year began. 

Companies with substantial Bitcoin holdings, such as MicroStrategy and Coinbase, have observed a decrease in their stock prices in the past month. These stocks serve as a means for investors to participate in cryptocurrency markets without direct investment in digital assets. However, with the pressure on Bitcoin, the repercussions have extended to associated stocks.

The Impact On Crypto Stocks

MicroStrategy saw a 25% reduction in stock value during December 24th, 2023, to January 24th, 2024, with shares declining to $450.99. On January 10th, the US Securities and Exchange Commission (SEC) approved the launch of spot Bitcoin ETFs, resulting in the introduction of nine new funds. MicroStrategy, known for its significant Bitcoin holdings of 189,150 BTC valued at $7.5 billion, experienced the impact of this development.

During the same period, Coinbase witnessed a 29% drop in share price since its IPO in 2021, with shares trading at $121.34 as of the latest report this past Wednesday. Even stocks in the mining sector, typically rallying with the crypto market, were not immune.

Riot Platforms, a Bitcoin mining company holding over 7,358 Bitcoin, experienced a 41% decrease in stock value over the past month, trading just above $10. Marathon Digital Holdings Inc., specializing in cryptocurrency mining with 13,716 BTC, faced a 38% decline in stock price to $16 by January 24th, 2024.

The Struggle For Stability

The combined trading volume for Bitcoin spot ETFs, including products by BlackRock, Grayscale, Fidelity, Bitwise, and others, reached over $20 billion earlier on in the week.

According to a JPMorgan report, the nine new funds attracted approximately $270 million in inflows not too long ago. When factoring in outflows by spot BTC ETF by Grayscale Investments, the net outflows amounted to about $153 million on that day. The combined ten funds have experienced net withdrawals for three consecutive days, transitioning to an ETF after SEC approval. Since their inception, the nine new ETFs have attracted $5.2 billion in inflows, countering the $4.4 billion outflow by GBTC.