On Monday, April 18, Bitcoin (BTC) briefly traded below the key $40,000 support level. This is a critical price for cryptocurrency. It continues to become more closely correlated with stock markets. Even worse for Bitcoin is its correlation to inflation and as a risk asset. Previously, Bitcoin fans thought the currency would behave as a hedge against stock markets.
Bitcoin’s wavering sent cryptocurrency platform stocks lower. Voyager (VYGVF) briefly traded below $4.00 at $3.93. Coinbase (COIN), which is vastly bigger by market capitalization, ended lower. At $145.16 on April 18, Coinbase closed at a new low. Investors are justified in treating cryptocurrencies and their platforms as risky assets. They are not hedges because technology stock investors may sell crypto holdings to meet margin calls. Conversely, cryptocurrency values depend greatly on sentiment. Until the government regulates it, crypto holders will buy and sell it as prices swing.
Voyager Digital has company-specific issues spooking investors. Voyager has several U.S. States treating Voyager’s rewards program as securities. Voyager needs regulators to consider Voyager Earn Accounts as interest payments. Without that, the platform has additional regulatory requirements. It must pay a hefty fine.
Bitcoin had a good run but is increasingly volatile. Fortunately, BTC is still in a long-term uptrend, so the latest downtrend is unlikely to last long.
