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Bitcoin fell 10% in 24 hours.
The time of dreams
It is possible to form a bear market in Bitcoin, which could contribute to the sale of shares with large flights – if not on a wider market.
adze
(ticker:
adze
),
PayPal Holdings
(PYPL) and
Square
(
Square
), to name just a few, trades in a closer correlation with digital currency. Tesla recently bought $ 1.5 billion in digital currency and said it intends to accept it as payment, fueling an increase in its stock.
High-growth stocks are under pressure due to fears of rising interest rates and bond yields, which reduce the current value of future cash flows. Tesla and online payment stocks are also crowded transactions, making them vulnerable to sales.
PayPal Holdings
and Square are becoming digital currency brokers, allowing consumers to buy and store Bitcoin in their apps, ultimately aiming to allow people to use it to shop.
Shares have slipped as Bitcoin has been in free fall. The digital currency recently traded around $ 47,300, down 10% in the last 24 hours and 18% from a high of about $ 58,000 on February 21, according to CoinDesk.
Lowering Bitcoin prices can help reduce the broader level
Nasdaq Composite
The index, which fell 2.5% on Monday and fell 2.2% on Tuesday.
The sale in Bitcoin could have been delayed after its growth in recent months and may have received a blow from Treasury Secretary Janet Yellen. She labeled Bitcoin an “inefficient” currency and warned that it could be a sign of speculative excesses, in an interview published Tuesday by the New York Times.
Traders seem to take Yellen’s comments as a sign that regulators in the Biden administration could lift more regulatory barriers to encryption, making it more difficult for banks and brokerages to offer trading services in digital currencies.
Nasdaq Composite
and other higher-capacity indices may be more closely linked to Bitcoin as the list of companies involved in crypto technology or services expands. Now includes the chip maker
Nvidia
(NVDA), the internet retailer
Overstock.com
(OSTK) and banks as well
Signature bank
(SBNY). Exchanges and brokerages as well
CME Group
(CME),
Cboe Global Markets
(CBOE) and Interactive Brokers (IBKR) are also turning into cryptocurrencies, as they expand trading in digital currency options and futures contracts.
Tesla’s push for Bitcoin was a vote of confidence in cryptography, but perhaps it also turned Tesla into a proxy for currency, fueling an exodus of shares from investors who wanted a carmaker, not a crypto game.
“Through Musk and Tesla aggressively embracing Bitcoin (and from a transactional perspective), investors are beginning to tie Bitcoin and Tesla to the hip,” Wedbush Securities analyst Dan Ives wrote in a note on Tuesday, referring to Tesla CEO Elon Musk.
The rise of Bitcoin has also worked wonders for stocks that have been left dead. Exceeding, for example, has increased 850% from $ 2.50 to $ 85 in the last year, including a 77% increase this year. The company has built a portfolio of blockchain and crypto-companies within its Medici Ventures division. He now intends to turn that unit into a limited partnership called the Pelion Venture Partners Fund.
The overrun fell 10% on Tuesday, continuing a slide in recent days as Bitcoin prices fell.
The impact of Bitcoin is felt strongly in PayPal and Square. Companies earn cryptocurrency trading fees and appear to increase customer engagement and revenue per user, compared to customers who are not involved in cryptocurrencies.
None of the companies so far makes much profit from Bitcoin, and transactions involving currency bring minimal contributions to revenue. Wolfe analyst Darrin Peller estimates that Bitcoin contributes less than 1% to PayPal’s revenue and a little more to Square.
“It’s not an important revenue factor, but it’s a useful tool to attract more customers,” he says. “As more people become involved in applications, they use their digital wallets more often, and more money goes into the ecosystem.”
Indeed, applications could be channels for Bitcoin to become mainstream. This, in turn, fueled enthusiasm for action.
But now I’m falling in tandem with Bitcoin. PayPal stock fell 6% to $ 258 on Tuesday and fell 15% in the last five sessions from records of about $ 305.
Square, which reports gains after Tuesday’s close, fell 7% to $ 248, down 9% from its February 27 record high of $ 272.75.
The total value of Bitcoin remains formidable at almost 1 trillion dollars. The blockchain technology behind it is being embraced by banks and other financial firms.
JPMorgan Chase
(JPM)
City Group
(C) and
Fargo fountains
(WFC) have all invested in the blockchain. Custody bank
Bank of New York Mellon
recently announced that it will own, transfer and issue crypto for asset management clients.
Several banks are keen to offer encryption services, he said
Bank of America
in a report Tuesday, but waiting for guidance from Washington. It may be some time before investors see any impact on profit and loss statements, however, especially if the Bitcoin bubble is now bursting.
Write to Daren Fonda at [email protected]