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Drop in the stock market
The Wall Street Journal reports that the stocks of cryptocurrency-focused companies have dropped as much as 60% this year, indicating a significant drop in interest — and a divergence between the stocks of crypto companies and the values of actual blockchain products, which are also down but not as much.
According to the Wall Street Journal, the scandal-plagued Coinbase is down 42 percent this year, while Riot Blockchain, a mining startup, is down 34 percent. The market capitalization of publicly traded crypto firms has plummeted from $100 billion in November, around the time Bitcoin's value reached new highs, to a much more modest $40 billion today.
In other words, consumer interest may be diminishing, as evidenced by recent trade volume declines. After all, transaction fees are how companies like Coinbase, which is still the largest cryptocurrency exchange in the United States by market capitalization, generate money.
Blues of Regulation
While cryptocurrencies aren't having a great year in 2022, they aren't falling at the same rate. According to the Wall Street Journal, Bitcoin is down 12% this year, while Ether is down 19%.
So, what's causing the decline in crypto stocks this year? It could be linked to the increased talk of regulation. For example, in an effort to combat money laundering, European Union officials may soon require crypto businesses to publish transaction details.
Crypto firms, on the other hand, are banding together to combat the new legislation.
It remains to be seen how crypto companies will adapt to these new regulatory frameworks – and how this will effect their market shares in the long run.
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