The cryptocurrency market is experiencing a downturn, with crypto-related stocks plummeting on Wednesday, particularly exchanges, following Robinhood's disappointing earnings report and escalating US-Iran tensions. Robinhood, a digital brokerage firm with a strong presence in the crypto space, saw its stock price drop by nearly 14% after reporting a 47% decline in crypto-related revenue in the first quarter. This decline had a ripple effect across the sector, with investors interpreting it as a sign of weak demand for crypto trading. As a result, major US crypto exchange Coinbase and institutional-focused exchange Bullish both experienced an 8% decline, while Gemini, the embattled exchange business of the Winklevoss brothers, saw a 6% drop.
Bitcoin miners Riot Platforms and MARA also slid by 6-7%, and Strategy, 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. Adding to the pressure was the reported 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. 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 impact on energy supply chains in the Middle East. Meanwhile, US stocks are experiencing modest losses, with the Nasdaq down 0.35%.
The afternoon session is expected to bring more catalysts, including the Federal Reserve meeting results, which are expected to reveal no change in rates in Jerome Powell's final meeting as chairman. 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.