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Bitcoin is down more than 15 per cent since the day of Donald Trump’s second inauguration as president of the United States.
Furthermore, the S&P 500 – the index tracking 500 of the largest listed companies in the country – is more than six per cent lower than when he was sworn in and is even lower than when he was elected president.
It comes after the president had proclaimed himself a friend to the markets and said he wants his nation to be the crypto capital of the world.
For companies and investors, there’s a crossover point there: listed businesses whose activities either revolve around cryptocurrency or at least closely follow their prices.
Coinbase Global is one such example. The crypto trading exchange platform can benefit from price changes to Bitcoin – it takes fees as a percentage of transactions as one revenue stream – but its share price is down 20 per cent in a month. Given its size by market cap, that’s equivalent to a drop of approaching £10bn of company value eroded in a few short weeks.
A rocketing Bitcoin price with Mr Trump’s plans to create a national reserve of the currency certainly impacted there – but a lack of action since has seen the swings reverse and more. It is far from the only affected company, while the wider tech market has seen a significant slump.
This week, however, Coinbase and others will meet with the president, representing the industry at the White House crypto summit.
The meeting, which should see the likes of Chainlink Labs, Robinhood, Exodus and more represented, will also see crypto czar David Sacks and “big donors” present, reports have claimed, but there is no firm agenda set for what will be discussed.
What is clear is that Bitcoin’s price has remained volatile, hitting a new all-time high in January but being unable to sustain that level.
Even after a drop to below $80,000 – from the high of more than $106,000 – the volatility continued, with presidential promises and potentially some technical trading indicators also contributing to a rise to near $95,000, swiftly followed by another retracing to $82,000 and, most recently, a climb to $90,000.
All that, in the past week.
Investing in cryptocurrencies has long been only for those of a strong disposition when it comes to risk:reward possibilities, and now with the advent of more established, publicly traded companies highly linked to crypto prices, that extends to the stock market too.
Add in the advent of a Bitcoin ETF launched last year, and the possibility of exposure to crypto assets is becoming easier than ever.
So Robinhood, Block and the others – and those who invest in them – would certainly benefit from clarity of Mr Trump’s administration’s plans.
MicroStrategy is another prime example. Previously involved with analytics software, the company is now a substantial investor in Bitcoin, holding well in excess of 400,000 coins as a prime driver of value in the business.
Naturally, that worth has subsided significantly whenever Bitcoin’s price drops: despite a near-ten per cent rise on Tuesday’s trading session, MicroStrategy remained more than 21 per cent down in the past month and over 40 per cent down from November highs heading into Wednesday trading. The volatility continued: it closed 12 per cent up on the day, yet still leaving it over a third lower from around Mr Trump’s arrival.
Block, the financial services provider founded by Jack Dorsey and formerly known as Square, is down over 28 per cent on the month and Robinhood Markets – another trading platform, though one which allows investments in stocks, funds and other assets as well as cryptocurrencies – is down more than 20 per cent since mid-February.
Stock market investing comes with associated risks at the best of times, so there are no dramatic surprises here that assets aligned to crypto markets are even more affected. Mr Trump’s own meme coin is also down by more than a quarter in the past month.
But there certainly have been surprises-in-waiting where share prices have reacted on a week-to-week basis after Mr Trump’s proclamations or promises. Tariffs and potential retaliations have now added another layer of uncertainty for companies in the wider stock market.
For plans and positivity alike, those operating – or investing – in or alongside the cryptocurrency sphere will hope Friday’s summit brings some measure of clarity at last.
