The current market selloff suggests that when stocks sneeze, cryptocurrencies can come down with something worse than a cold.
Crypto’s correlation with stocks had become well established last year as institutional investors piled into the assets and it became more established. The link managed to hold even after Russia’s invasion of Ukraine roiled markets in February.
But Bitcoin, the first and biggest cryptocurrency, is down about 34% this year, having slipped below $30,000 on Tuesday. By contrast, the
Nasdaq
is down 25%. Crypto intelligence provider Glassnode reports that some 40% of Bitcoin holders are now underwater.
Other digital assets have fared worse. Ether, the second-largest cryptocurrency, slipped to its lowest since 2021. TerraUSD, a stablecoin intended to be closely tied to the U.S. dollar, fell as low as 30 cents. The cryptocurrency that backs it, Luna, has also plummeted.
Shares of
Coinbase
,
the platform for crypto trading, reported a wider than expected loss on Wednesday. Its shares tanked, falling 83% from their all-time high in November.
Everyone expects crypto to be volatile. That is part of its charm, and has allowed many traders to profit from it. What goes up very quickly can also sink fast. Bank of England Governor Andrew Bailey warned investors to only get into crypto if they are prepared to lose all their money.
The question was always whether crypto assets are a bubble whose value can sink to zero when market optimism evaporates.
We may have an answer in the very near future.
—Brian Swint
*** Join Barron’s senior writer Lauren Foster today at noon as she chats with bestselling author Robert G. Hagstrom, CIO and a senior portfolio manager at EquityCompass, about the investing mind-set and ideas that have shaped Warren Buffett’s legendary career. Sign up here.
Tesla
CEO Elon Musk said he would reverse Twitter’s ban of former President Donald Trump from the platform after he buys the social-media company, calling the decision last year a mistake that alienated a large part of the country.
Twitter
permanently suspended Trump’s account in January 2021 for violating its Glorification of Violence policy, saying allowing tweets could lead to further violence after the Jan. 6 breach of the U.S. Capitol. “I would reverse the permaban,” Musk said during an interview at a Financial Times virtual conference on autos.
What’s Next: Trump, a prolific tweeter who once had 88 million followers, was also banned from Twitch,
Snapchat
,
YouTube,
Facebook
,
and Instagram after the Jan. 6 attack, and has since started his own social-media platform, Truth Social. He has said he doesn’t plan to return to Twitter.
—Janet H. Cho
Coinbase’s earnings fell short of estimates, and revenue fell 27% from last year, the effect of lower cryptocurrency asset prices plus volatility that began in late 2021 and has persisted. With Bitcoin at half its November peak price, Coinbase shares are at their lowest since last year’s initial public offering.
Roblox
,
a digital gaming platform, are also down 67% from its IPO one year ago.
What’s Next: Coinbase has started Coinbase NFT, a web3 social marketplace for nonfungible tokens designed to help users discover, buy and sell NFTs.
—Ben Levisohn and Janet H. Cho
President Joe Biden has been talking up how he plans to combat inflation as the midterm elections loom in the fall, trying to draw a contrast between his administration and the Democrats and Republican opponents who have seized on high inflation as a campaign issue.
What’s Next: Biden said the passage of spending on green and renewable energy projects could cut household utility bills by up to $500 a year. The president will travel to Illinois today to visit a family farm and talk about food prices.
—Janet H. Cho
Occidental Petroleum
was the latest energy giant to post record quarterly profit late Tuesday, as concerns about global energy supplies lifted prices. Shares in what is one of the biggest producers of U.S. onshore oil and gas, were rising around 1.5% in the Wednesday premarket.
What’s Next: Occidental maintained its dividend level for now but says it will consider raising it after it pays down more debt. The company has ambitious plans to build facilities to capture greenhouse gas emissions from the air as it aims to become a major carbon management company.
—Brian Swint
Carvana
,
the online car dealer that expanded aggressively during the pandemic’s used-car sales boom, plans to cut 12% of its workers. CEO Ernie Garcia III told employees the company overshot its growth strategy.
Peloton
and
Netflix
.
KAR Auction Services
for $2.2 billion, adding 56 locations with 6.5 million square feet of facilities.
What’s Next: Carvana said it was already seeing positive trends and expected to continue to gain market share in 2022, but it won’t give specific near-term guidance this year, citing high used-vehicle prices, rising interest rates, and high fuel prices potentially affecting consumer behavior.
—Liz Moyer
Dear Quentin,
I have a boy and a girl, both great kids and both in college. When they were teenagers my wife died which left them with varying levels of trauma. My son was 14 and my daughter was 16, and it hit my daughter harder. My son is naturally very gifted and is about to graduate with a degree in mathematics from a major university. He works hard, but not too hard. He is gifted.
My daughter is three semesters away from graduating with a degree in mechanical engineering from a branch campus of a major university. She is smart, but not gifted like my son so she has had to work harder than anyone I have ever seen to be an engineer. I am very proud of her willingness to do what most kids would not do.
My son, because of his degree and his gifts, was able to work during school. He had a job in the cafeteria so when Covid-19 hit he lost his job. He made more from unemployment than if he was working. My daughter cleaned houses and did odd jobs when she could. She had worked her first year and it was just too hard.
My daughter struggled more than my son after my wife’s death and went to college with little direction for a couple of years, majoring in communications. When she changed schools and majors to go into engineering very little of her degree transferred. I have given my daughter far more money for college. I have paid tuition for both kids, they pay their own living expenses after two years in the dorms.
However, because my son is on track and my daughter has been going much longer I have paid $20,000 more in tuition for her than for him. In addition, my son received unemployment and had 19 months of Social Security.
How can I be fair to both? I have given my daughter a lot more money than my son and she has taken that gift and used it wisely to better herself and set up a bright future. My son has not squandered his, but I do not feel he will have the same outlook and I worry. I was wondering if I should take the difference between what I gave her and what I gave him, and invest it for him: $20,000 now will be more than half a million for him at retirement.
I would appreciate your thoughts. I love my kids and want them to have the life they deserve but I want to be fair to both.
—The Father
Read The Moneyist’s response here.
—Quentin Fottrell
—Newsletter edited by Liz Moyer, Camilla Imperiali, Steve Goldstein, Rupert Steiner
Click Here For The Original Source
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