Crypto Stocks Tumble as Bitcoin Rout Fuels Massive ETF Outflows
Shares of Coinbase, MicroStrategy, and Marathon Digital fall sharply after the digital asset sinks, erasing recent gains and triggering widespread liquidations.
Crypto-related equities plunged in Friday trading, caught in the downdraft of a sharp sell-off in Bitcoin that was accelerated by a massive exodus from U.S. spot exchange-traded funds.
Shares of cryptocurrency exchange Coinbase (COIN) slid 7.4%, while business intelligence firm and major Bitcoin holder MicroStrategy (MSTR) dropped over 5%. Bitcoin mining company Marathon Digital (MARA) was among the hardest hit, falling 7.7% as investors fled the sector.
The sell-off in equities mirrored a turbulent 24 hours for the digital asset market. Bitcoin, the largest cryptocurrency by market capitalization, fell sharply to the low-$80,000s, wiping out weeks of gains. The move triggered a cascade of liquidations, with data indicating that leveraged long positions worth nearly $2 billion were wiped out across the crypto market, amplifying the downward price pressure.
A primary catalyst for the rout was a dramatic reversal in institutional sentiment, reflected in the flows for spot Bitcoin ETFs. These funds, which only launched earlier this year, experienced a net outflow of $903.1 million on Thursday, marking the second-worst day of outflows on record, according to data from The Block. This significant exit of institutional capital suggests a growing risk-off mood after a period of strong inflows that had propelled Bitcoin to new highs.
The heavy outflows represent a stark departure from the bullish narrative that has surrounded the ETFs, which were hailed as a breakthrough for mainstream crypto adoption. The sudden reversal has unnerved a market that had become accustomed to steady institutional buying providing a floor for prices.
Companies like MicroStrategy and the Bitcoin miners are particularly sensitive to the cryptocurrency's price swings. MicroStrategy holds a significant amount of Bitcoin on its balance sheet as part of its corporate strategy, making its stock a popular proxy for investors seeking crypto exposure. Similarly, the profitability of mining firms like Marathon Digital is directly tied to the price of Bitcoin.
The broader market context, including diminishing expectations for aggressive Federal Reserve interest rate cuts, has also contributed to the cautious sentiment. As the market recalibrates, high-beta assets like cryptocurrencies and related stocks are often the first to be sold off. For now, investors will be closely watching ETF flow data and Bitcoin's price action for signs of stabilization or further weakness.