The cryptocurrency market is experiencing a downturn, with crypto-related stocks declining sharply on Wednesday, particularly exchanges, following Robinhood's disappointing earnings report and escalating US-Iran tensions. Robinhood, a digital brokerage firm known for its crypto-friendly services, saw its stock price plummet by nearly 14% after reporting a 47% decline in crypto-related revenue in the first quarter. This decline had a ripple effect on the sector, with investors interpreting it as a sign of weak demand for crypto trading. As a result, major US crypto exchanges such as Coinbase and Bullish experienced an 8% drop in their stock prices, while Gemini, an exchange owned by the Winklevoss twins, fell by 6%.
Bitcoin miners Riot Platforms and MARA also saw their stock prices decline by 6-7%, and MicroStrategy, the largest corporate owner of bitcoin, was down 4%. The decline in crypto stocks was more pronounced than the decline in crypto prices themselves, with bitcoin edging below $76,000, down 0.5% over the past 24 hours. The rejection by President Trump of an Iranian proposal to end the naval blockade and open the Strait of Hormuz, a critical global oil shipping route, added to the pressure. The proposal involved reopening the strait while delaying nuclear negotiations, but Trump opted to maintain the naval blockade until a broader nuclear deal is reached.
This development led to a 6% surge in oil prices, with the West Texas Intermediate topping $100 a barrel, due to concerns about the potential disruption to energy supply chains in the Middle East. In contrast, US stocks posted modest losses, with the Nasdaq down 0.35%. The afternoon session is expected to bring more catalysts, starting with the results of the Federal Reserve meeting, where no change in rates is anticipated. Market participants will be looking to the accompanying policy statement and Powell's post-meeting press conference for clues about the future direction.
After the US market closes, several big tech firms, including Alphabet, Amazon, Meta, and Microsoft, will report their earnings, with traders focusing on their artificial intelligence-related spending as a gauge for the AI trade and infrastructure buildout.