Crypto stocks are struggling under regulatory concerns
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Cryptocurrency stocks traded in the US market underperformed as investors await the release of Consumer Price Index (CPI) data.
The regulatory environment has caused a stir in the crypto world, sending share prices down for some of the industry’s leading players. Silvergate, a cryptocurrency-friendly bank, saw its share price drop 3.7% to $14.46, according to Nasdaq data.
The bank has faced increased scrutiny in recent months following the collapse of FTX, and concerns about regulatory oversight in the United States of financial entities that interact with cryptocurrencies. MarketWatch reports that Silvergate has become the most shorted stock on Wall Street.
Meanwhile, Coinbase shares were trading around $56, down about 0.8%. Last week, stocks fell 22% after the Securities and Exchange Commission (SEC) informed the public that Kraken had agreed to pay $30 million and stop offering staking products to US customers.
Ryan Quinn, a senior equity analyst at Mizuho, commented on the situation, saying that last week’s share price drop and today’s losses are likely related to the SEC’s crackdown on betting.
Despite the cryptocurrency’s rally in January, Coin noted that retail investors have not yet returned to the market, which could put pressure on Coinbase’s revenue, since the majority of its income comes from transaction fees charged on retail trading.
On a positive note, MicroStrategy and Block rose, gaining 2% and 3%, respectively. Major US stock indices also rose, including the S&P 500, Nasdaq 100 and Dow Jones Industrial Average.
The cryptocurrency market is undergoing a rough correction as investors await the release of CPI data. The regulatory environment continues to create uncertainty, which is driving down stock prices for some of the major players in the industry.