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Bitcoin ETFs drive a 20% drop in Coinbase and MicroStrategy stocks — and Fidelity says they’ll fall even lower

Bitcoin ETFs drive a 20% drop in Coinbase and MicroStrategy stocks — and Fidelity says they’ll fall even lower
Coinbase CEO Brian Armstrong should expect to see his stock fall further, bearish analysts say. Credit: Andrés Tapia
  • Several crypto-related equities have tumbled following the launch of nearly a dozen US spot Bitcoin ETFs.
  • Analysts believe traders have begun unwinding exposure to those assets with more pain expected in the short term.

The explosive launch of US spot Bitcoin exchange-traded funds have shifted market dynamics, sending stocks including Marathon Digital Holdings, Coinbase, and MicroStrategy down at least 20%.

Those stocks are closely aligned with Bitcoin, and have previously acted as a proxy for broader crypto sentiment.

That proxy element has now been all but eliminated — investors wanting to ride crypto sentiment without investing in crypto itself are now able to do so via a spot Bitcoin ETF.

It will get worse, market watchers say.

“Some ‘proxy’ positions in Bitcoin futures and Bitcoin-sensitive equities have been unwound, and my guess is there is more to come on that front,” Fidelity’s global macro head Jurrien Timmer wrote Monday on X, the social media network previously known as Twitter.

It comes as the total net flows to US spot Bitcoin ETFs have surged since their inception with frontrunners BlackRock and Fidelity each luring about $1.2 billion and $1 billion, respectively.

Marathon Digital Holdings, Coinbase, and MicroStrategy have each suffered double-digit losses this month.

Bitcoin, meanwhile, has fallen 15% since the ETFs debuted, to just shy of its $40,000 level.

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Coinbase is down 20% over that same period, while Microstrategy has lost close to 21%. Bitcoin miner Marathon has plunged 40% over the last 12 days to $16.61.

DL News was previously told competition in the form of new ETFs could impact Coinbase’s profit despite the exchange providing custodial services to a number of those products.

Miners, meanwhile, will have to contend with Bitcoin’s upcoming halving event, expected to slash rewards, and remain on higher fixed electricity costs for longer.

“While these names have corrected from their highs, we feel downside remains. Specifically for Microstrategy, the stock continues to trade at a 20% premium to its underlying BTC,” Hal Press, founder of crypto hedge fund North Rock Digital tweeted.

MicroStrategy is known for holding a substantial amount of Bitcoin on its balance sheet, to the tune of 189,150 BTC, or roughly $11.4 billion.

Trading at a premium means the market value of the company is higher than the value of the Bitcoin it holds.

Press argues the stock should be discounted, because each dollar invested in the company’s shares represents a claim to less than one dollar’s worth of Bitcoin.

Thus, there’s no added financial advantage, or “leverage,” to justify a higher price.

A higher effective management fee and no mechanism to access the underlying Bitcoin Microstrategy holds were additional catalysts Press pointed to in support of continued selling.

Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.