What happened

Shares of Overstock.com (NASDAQ:OSTK) dropped as much as 17% today but recouped some of the losses, and are down 8% as of today's market close. The shares are down 30% just this week. 

Down arrow indicating dropping market with stock ticker board in background.

Image source: Getty Images.

So what

The share price of the home-furnishings online retailer has soared this year. By mid-August, the shares had gained over 1300% as the COVID-19 pandemic boosted both online retailing and the home-improvements sectors. Shares have still gained 850% year to date after today's drop. 

This week's drop also may have been accelerated by the recent plunge in cryptocurrencies. While that doesn't seem to make any sense, there's an explanation. In 2014, Overstock began to develop and advance blockchain technologies. It created Medici Ventures, a wholly owned subsidiary that started the majority-owned subsidiary tZERO. tZERO mainly works to promote the development and adoption of digital securities. As of the end of 2019, Overstock says that neither Medici Ventures nor tZERO has generated significant revenue from any blockchain technology.

Now what

Some investors who have helped create this year's outsized gains based on the promise of those subsidiaries may be locking in profits as the cryptocurrency market sinks. Overstock's share price is down almost 45% since August 19. 

Today's drop is a continuation of that retreat. Bank of America (NYSE:BAC) also initiated coverage on Overstock today with a neutral rating and a price target of $78. While that target is above today's opening price of $71, it's not enough of an affirmation for Overstock shares to buck the trend in a dropping market. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.