The cryptocurrency sector is experiencing a significant downturn on Wednesday, with exchanges being the hardest hit, following Robinhood's disappointing earnings report and escalating US-Iran tensions. Robinhood, a digital brokerage firm with a strong focus on cryptocurrency, saw its stock plummet by nearly 14% after announcing a 47% decline in cryptocurrency-related revenue in the first quarter. This weakness has spread throughout the sector, as investors interpret it as a sign of lackluster demand for cryptocurrency trading. Major US cryptocurrency exchanges, including Coinbase and Bullish, have fallen by 8%, while Gemini, the exchange business of billionaire investors Cameron and Tyler Winklevoss, dropped by 6%.
Bitcoin miners, such as Riot Platforms and MARA, have also slid by 6-7%, and Strategy, the largest corporate owner of bitcoin, is down by 4%. The decline in cryptocurrency stocks is more pronounced than the decline in cryptocurrency prices themselves, with bitcoin edging below $76,000, down by 0.5% over the past 24 hours. Adding to the pressure is the reported rejection by President Donald Trump of an Iranian proposal to end the naval blockade and open the Strait of Hormuz, a critical global oil shipping route. 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 news has sent oil prices surging by 6%, with the West Texas Intermediate topping $100 a barrel, due to concerns that energy supply chains in the Middle East could remain under pressure. US stocks are posting modest losses, with the Nasdaq down by 0.35%. The afternoon session is expected to bring more catalysts, starting with the Federal Reserve meeting results, where no change in rates is expected. 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 major tech firms, including Alphabet, Amazon, Meta, and Microsoft, will report their earnings, with traders eyeing their artificial intelligence-related spending as a gauge for the AI trade and infrastructure buildout.