Yahoo Finance Live’s Brian Sozzi and Julie Hyman discuss the volatile nature of bitcoin as the cryptocurrency and other digital assets experience price tumbles.
Video Transcript
JULIE HYMAN: Not good news either, necessarily, if you’re a crypto bull. [INAUDIBLE] looking at the year end performance here. We have been seeing, really across the board, cryptocurrencies trade lower and Bitcoin is on track for its worst monthly performance going back to May.
And Brian Sozzi, as I look around this morning, there are a number of different explanations, as there tend to be, when it comes to Bitcoin. A lot of them are technical. There has been some discussion about options activity, options that are set to expire on Friday.
And CoinDesk reporting that Bitcoin tends to move towards the max [INAUDIBLE] point in lead up to an expiration of the size that we’re seeing on Friday. There is also talk about leverage positions in cryptocurrencies, and Bitcoin in particular, and that can exacerbate the selling as well. So it’s always interesting to kind of try to look through the hood as much as we can when it comes to some of these cryptocurrency moves.
BRIAN SOZZI: If there’s any savings grace here, Julie, it’s that we haven’t seen that one day where everything just plunges. I know Bitcoin dropped about 7% yesterday, fell below that 50,000 mark, but still not seeing that rout in Bitcoin and other cryptos happen all in one session. So that’s good, but again, this could be painful if you’ve been long Bitcoin all year, and now you’ve been caught up in this rout.
And Julie, it’s not just the cryptoverse and the tokens or coins themselves, really it’s some of the stocks. And I’m just looking at my notes here. Riot Blockchain down about 36% so far this month. You have Coinbase down 13%. Robinhood has been absolutely slaughtered, down close to 40% over the past month in large part because of these crypto exposures.
But still not seeing any takes or chatter out there, Julie, that suddenly Bitcoin is going to go away or some of these other coins, like Dogecoin, are going away. I think we can all agree that Bitcoin and other cryptos are here to stay. It’s just a matter, perhaps, of some year end portfolio cleaning up. And perhaps, you know, that this dynamic, or the selling, will change when the calendar turns.
JULIE HYMAN: Yeah, there’s a lot of discussion within the crypto community about whether the traditional four-year cycle in Bitcoin that we have seen mimic to some extent the other cryptocurrencies whether that four-year cycle is broken, whether we’re going to see sort of a rejiggering or remaking of how crypto trades, particularly with the increased institutional support that we’ve seen this year. But you know, that’s a wait and see situation.
When it comes to Coinbase, I wanted to just zero in on that one in particular for just a minute, because it’s sort of emblematic of what we have seen, not just of crypto, but of some of the hot money stocks that we’ve been watching this year. And I was just looking at some of the stats this morning.
So Coinbase, its first trading day was back on April 14. It wasn’t an initial public offering, remember. It was a direct listing and the shares closed that first day at about 328. So you see now they’re trading at 261. And again, this is reflective of crypto and the sort of roll over that we’ve seen, but it’s also reflective of what we’ve seen in terms of IPOs.
We’re going to talk about this more in the show, Sozz, but “The Wall Street Journal” reporting this morning that 2/3 of all the debuts this year are trading below those IPO or debut prices. And Coinbase is just one example of those. There are many others.
BRIAN SOZZI: I’m feeling a little upbeat, Julie. So I’ll take the other side of this. I would have to think at some point soon you will see buyers emerge into the likes of a Robinhood and Coinbase. And I understand the headline risk and I understand that, you know, profits are likely to be pressured in near term.
But at their core, these are very impressive platforms, Julie, with companies that have created businesses that do have pretty wide moats around their business, in my humble view. At some point, you would think buyers would step in here and start to give some valuations on the companies that deserve. I would argue, we’re coming at that point where the valuations on these businesses are out of line with their future potential.
JULIE HYMAN: In both directions, maybe still, for some of them.
