The cryptocurrency market is experiencing a downturn, with major crypto-related stocks declining sharply on Wednesday. This downturn is largely attributed to Robinhood's disappointing earnings report and rising tensions between the US and Iran.
Robinhood, a prominent digital brokerage firm, saw its stock plummet by nearly 14% after reporting a 47% decline in crypto-related revenue for the first quarter. This decline had a ripple effect on the sector, with investors interpreting it as a sign of sluggish demand for crypto trading. As a result, US crypto exchange Coinbase and institutional-focused exchange Bullish both experienced an 8% decline, while Gemini, the embattled exchange business of the Winklevoss twins, dropped by 6%.
Bitcoin miners Riot Platforms and MARA also slid by 6%-7%, and Strategy, the largest corporate owner of bitcoin, saw a 4% decline. 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 Donald 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 news led to a 6% surge in oil prices, with the West Texas Intermediate topping $100 a barrel due to concerns about energy supply chains in the Middle East.
US stocks, on the other hand, posted modest losses, with the Nasdaq down 0.35%. The afternoon session is expected to bring more catalysts, starting with the Federal Reserve meeting results, which are anticipated to yield no change in rates. 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 eyeing their artificial intelligence-related spending as a gauge for the AI trade and infrastructure buildout.