Coinbase Global Inc (NASDAQ:COIN) and Tesla Inc (NASDAQ:TSLA) led the declines as cryptocurrency-related stocks plunged, weighed down by plummeting bitcoin prices. Bitcoin was down 20% in only 24 hours at one point this morning, officially putting it in bear market territory. The cryptocurrency has fallen more than 30% in a week.
Coinbase tumbled more than 8% in early trading, while Tesla was down by about 4%.
Bitcoin price tumbles
The bitcoin price plunged below $40,000 for the first time in 14 weeks and then declined under $36,000 early this morning. The falling price comes after China officially ordered financial institutions not to conduct crypto-related transactions on Tuesday.
According to CNBC, JPMorgan also reported that large institutional investors started dumping bitcoin and buying gold instead. The firm based that observation on open interest in CME bitcoin futures contracts.
This month's pullback also intensified last week when Tesla CEO Elon Musk announced that the automaker would stop taking bitcoin as a form of payment due to environmental concerns about cryptocurrency mining. He has often been tweeting about cryptocurrencies.
Galaxy Digital Chairman and CEO Mike Novogratz told CNBC's Squawk Box that bitcoin is "not going to bounce right back," adding that it will "consolidate for a while." He also said there was a "confluence of events…where you started breaking down the positivity in the price action, and now we've got a liquidation event."
Crypto stocks plunge
Cryptocurrency exchange Coinbase plunged 8% out of the gate this morning, while Tesla, a large holder of bitcoin, was down 4% in early trading. MicroStrategy Incorporated (NASDAQ:MSTR) initially tanked 15% in premarket trading but recovered slightly to be down 10% after the opening bell. MicroStrategy bought a large amount of bitcoin for its corporate treasury.
Just five weeks ago, the bitcoin price peaked close to $65,000 around the time Coinbase debuted on the NASDAQ. Square Inc (NYSE:SQ) declined by almost 4% in morning trading, while PayPal Holdings Inc (NASDAQ:PYPL) was down by about 1% after the opening bell. Both companies facilitate cryptocurrency transactions and have been big buyers of bitcoin.
NVIDIA Corporation was down almost 4% this morning. It manufactures semiconductors used in computers for crypto mining. However, it has reportedly been trying to curb the use of its chips for that purpose.