Cryptocurrency-related shares plummet as Bitcoin falls

By Bloomberg | 16 Nov 2018 at 13:02hrs
Crypto
Shares of several cryptocurrency-related companies in Asian markets fell Thursday, following earlier losses among U.S. names after Bitcoin led a sell-off in digital currencies.

Monex Group Inc., which owns the Japanese exchange Coincheck, and SBI Holdings Inc. each fell more than 2 percent to close at two-week lows in Tokyo, while Vidente Co. and Omnitel Inc. ended the day down at least 7 percent in Seoul to lead declines among crypto-linked stocks.

Blockchain-related stocks in the U.S. earlier fell in Wednesday trading. Ideanomics Inc. plunged 49 percent, the fintech firm's biggest one-day loss since 2010, after reporting worse third-quarter results compared with a year ago due to infrastructure costs and new executive team hires. Xunlei Ltd. depositary receipts tumbled 13 percent.

Bitcoin, the largest cryptocurrency, plunged as much as 15 percent during U.S. trading hours, and was steady at $5,571.18 as of 8:27 a.m. in London, according to consolidated pricing data compiled by Bloomberg. Rival coins mostly steadied after a retreat overnight, as the industry braces for a contentious split in Bitcoin offshoot Bitcoin Cash. After diving 17 percent yesterday, Bitcoin Cash gained 3.1 percent on Thursday.

"The $6,000 mark, which had been serving as a floor for a long time, gave way — this feels like a bit of a dangerous sign," said Soichiro Tsutsumi, a trader with eWarrant Japan Securities K.K. in Tokyo. "Companies most impacted by the price move would be the ones with business models reliant on a client pool, on concern that the number of client accounts won't expand."

Bitcoin's slump pushes prices into "deeply oversold" territory and suggests it may be due for a short-term rally, however longer-term technical indicators aren't so favorable, according to Rob Sluymer with Fundstrat Global Advisors.

"This week's breakdown produced significant technical damage," Sluymer wrote in a note Wednesday. "That will likely take weeks, if not months, to repair to create a durable enough price ‘structure' to support a multi-month rally."

One stock bucking the trend was Ceres Inc., which rose 8.2 percent after reporting nine-month earnings.

Two versions of Bitcoin Cash software will be competing to become the dominant chain on Thursday, and some miners could be switching from mining Bitcoin to mining Bitcoin Cash to lend one or the other version support.

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