What happened

Many companies with close ties to the cryptocurrency market saw their share prices plunging on Wednesday. Here are some of the most prominent victims of today's cryptocurrency tension:


Cryptocurrency Ties

Deepest Price Drop on Dec. 9 2020

Riot Blockchain (NASDAQ:RIOT)

Bitcoin mining


Marathon Patent Group (NASDAQ:MARA)

Cryptocurrency mining, digital asset management



Makes specialized bitcoin mining hardware


MicroStrategy (NASDAQ:MSTR)

Invested most of its cash reserves in bitcoin


Grayscale Bitcoin Trust (OTC:GBTC)

Investment trust holding bitcoin assets


Data collected from Yahoo! Finance on Dec. 9 2020, 2:50 p.m. EST.

So what

Many popular cryptocurrencies suffered dramatic cuts on Wednesday, reversing the positive momentum they had shown in recent weeks. A single bitcoin token was worth as much as $19,520 last Thursday but fell below the $18,000 mark on Wednesday morning. That's an 8% drop in less than a week and a 3% single-day loss, according to data from CoinMarketCap. Other popular cryptocurrencies followed similar paths over the last week, including Ethereum and Ripple.

A frowning businessman scratches his head in front of a bitcoin logo and several arrows pointing downward.

Image source: Getty Images.

Now what

It's no surprise to see the companies listed above taking a dive when bitcoin and Ethereum prices are swooning. The bitcoin drop at the heart of it all looks like nothing more than profit-taking.

Last week's peak bitcoin price represented a 170% gain from $7,240 on Jan. 1. This week's bitcoin moves were made on modest trading volumes, roughly matching bitcoin's average trading volumes of the last three months.

Bitcoin prices have approached the $20,000 mark several times in recent weeks, but always retreated to lower ground again. There's no telling what happens next, if and when bitcoin prices finally do cross that psychologically important threshold, except that cryptocurrencies will continue to be highly volatile for many years to come. Fellow Fool Dan Caplinger calls this winter bitcoin's defining moment, a crucial crossroads that will set the tone for whatever comes next.

Nearly all of the cryptocurrency stocks in the table above have all at least doubled in 2020, led by 665% gains in Riot Blockchain and a $380% return in Marathon Patent Group. The exception to that rule is China-based hardware specialist Canaan, whose bitcoin mining operations have lost some of their computing horsepower due to coronavirus mitigation rules. Canaan's share prices have fallen 37% year to date.

Cryptocurrencies are exciting but unpredictable investments today. You can buy the tokens themselves or invest in the crypto market through funds and companies like the ones mentioned here. Either way, you need to buckle your seat belt and get ready for a rocky ride.

Even the best businesses in the mix will need bitcoin prices to continue their skyrocketing rise. Make sure you can afford to lose your bitcoin-based investments while crossing your fingers for long-term success. That's just the nature of this unpredictable asset type.

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.