Shares of cryptocurrency stocks got crushed early in trading on Tuesday, as Bitcoin (CRYPTO:BTC) and other cryptocurrencies dropped. Since the stock market closed on Monday, Bitcoin dropped $39,353 per coin to about $36,400 last night, giving up about 10% of its value. Bitcoin has recovered slightly but is still trading at $37,727 as of this writing.
Coinbase Global (NASDAQ:COIN) fell as much as 6.7%, Canaan (NASDAQ:CAN) dropped 12.9%, Bitfarms (NASDAQ:BITF) was off 14.4%, and SOS Limited (NYSE:SOS) was down as much as 14.1%. At 1:00 p.m. EDT, the stocks were down 4.1%, 12.6%, 13.9%, and 13.2% respectively.
For perspective, the price of Bitcoin is still up over 20% since a week ago when the cryptocurrency was trading for under $30,000, so the day is bad but the weekly trend is fairly strong.
It's been a volatile week for Bitcoin, driven by reports that Amazon (NASDAQ:AMZN) would accept the coin as payment for goods -- but then, the company rejected those reports. Bitcoin bounced over $40,000 on initial reports but has come off those highs today. Amazon didn't say it wasn't ever going to accept Bitcoin but that the move isn't imminent.
There continues to be a lot of turbulence and speculation around Bitcoin miners, in particular, who used to be primarily located in China. As China has cracked down on various industries, like crypto, the market is reacting sharply to any bad news.
Overall, cryptocurrencies continue to be volatile, depending on what big names are saying and doing. Over the last week, Ark Investment Management's Cathie Wood, Elon Musk, and Square's Jack Dorsey have made positive comments about Bitcoin, which got a boost by the Amazon speculation. But with Amazon saying that it won't accept Bitcoin anytime soon, the momentum has died, not only for Bitcoin but for exchanges and miners, as well.
The short-term news today seems to be negative, but there haven't been any fundamental changes to the underlying thesis behind Bitcoin. More and more companies are looking to accept it as payment, and over time, that could help the crypto's price and related companies.
What investors need to remember is that cryptocurrency is inherently volatile, and that's exactly what we're seeing today. In the cypto mining industry, in particular, stocks will likely exaggerate the move of Bitcoin itself, just like other commodity miners.
Over the next few weeks, we'll see what the fundamentals look like for some of these crypto companies. Mining has been high growth but has had trouble turning that to profits, which investors hope will improve. Coinbase will want to show it can continue to grow profitably to keep its lofty valuation.
I remain skeptical of the Bitcoin trends long term, but investors who are more bullish should see this week's volatility as perfectly normal. Even the best growth stocks don't go up in a straight line, and Bitcoin isn't going to, either.