Tesla, Coinbase lead drop in crypto-related shares as bitcoin plunges

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SpaceX founder and Tesla CEO Elon Musk watches as he visits the construction site of the Tesla gigafactory in Gruenheide near Berlin on May 17, 2021.

Michele Tantussi | AFP

Cryptocurrency-related stocks, led by Tesla and Coinbase, fell on Wednesday as Bitcoin broke the equivalent of a bear market in just one day.

Bitcoin fell more than 30% at its low of the day from the session to $ 30,001.51, its lowest level since late January, according to Coin Metrics. The cryptocurrency and related stocks bounced back later on Wednesday, and Bitcoin rose back to $ 39,774 at 4:01 p.m. ET.

“You had a confluence of events … where you started breaking positive price action and now we have a liquidation event,” Mike Novogratz, CEO and chairman of Galaxy Digital, longtime bitcoin bull, told CNBCs ” Squawk Box “. “” The market will consolidate. He’ll find a bottom somewhere. I hope he’s around here. “

The move comes after China banned financial institutions from conducting transactions related to crypto on Tuesday. Separately, a JPMorgan report showed that large institutional investors ditched Bitcoin in favor of gold.

Bitcoin’s decline this month has worsened a week ago after Tesla CEO Elon Musk apparently changed his mindset about crypto by saying the company would not mine Bitcoin due to environmental concerns related to crypto mining accept more than payment.

Tesla fell around 2.5% on Wednesday. Musk on Wednesday morning stated that Tesla will not sell its large amount of Bitcoin while the cryptocurrency is plummeting.

Crypto-related stocks are falling amid the bitcoin slide

The micro-strategy, which made headlines by buying a significant amount of Bitcoin for their corporate coffers, fell 6.6%.

Coinbase, the newly public crypto exchange, fell around 6% on Wednesday afternoon. The website appeared to be unavailable to some users on Wednesday morning, but the company said it resumed service a few hours later.

Bitcoin’s price approached $ 65,000 five weeks ago before it peaked around the time of Coinbase’s public debut.

“Coinbase’s trading debut coincides with the peak of Bitcoin, and many traders cannot make a compelling argument that it has since been able to make up for all of those losses,” said Edward Moya, senior market analyst at OANDA.

Square and PayPal – which facilitate transactions in cryptocurrencies and have been big buyers – fell Wednesday morning before rebounding later in the day. The Square fell 1.5% and PayPal made up for the losses and closed 0.6% higher.

Nvidia also fell, and rebounded 0.4% later on Wednesday. The company makes chips used in crypto mining, but is reportedly trying to curb their use for this purpose.

The Grayscale Bitcoin Trust, the popular trust that holds a large amount of Bitcoin, fell about 5% on Wednesday.

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– CNBC’s Michael Bloom contributed to the coverage.