Gold, Stocks, and Bitcoin: Weekly Overview — May 19
Be[In]Crypto brings you this week’s price movements for gold, stocks, and Bitcoin (BTC) – our stock pick this week is Coinbase.
As badly as Bitcoin (BTC) has performed recently, the past two weeks may have been the worst this year.
Trading at just above $39,000 on May 5, it tumbled that day to around $36,500, reaching $36,000 by May 7. On May 8, it fell even hitting support at $30,000 on May 10.
Over the next two days it struggled with resistance at around $32,000, before breaking through support, hitting as low as $24,000 on May 12. Buying pressure promptly returned, sending BTC back above $30,000, where it has roughly traded since then.
Despite theoretically trading independently of other assets, Bitcoin and other cryptocurrencies have largely traded with tech stocks recently. With rising interest rates and the prolonged war in Ukraine, both higher risk assets have taken a turn for the worse this year.
“Bitcoin was dragged down alongside most risky assets as Wall Street suffered the worst loss in almost two years,” wrote Edward Moya, an analyst at broker Oanda. “Bitcoin remains a risky asset and vulnerable to further pain if the de-risking continues.”
While largely considered a safe-haven asset, gold has also trended downwards amidst the market volatility recently. Trading above $1,900 on May 5, gold fell to $1,875 later that day.
While it pricked back up to $1,890 the next day, by May 9, it had fallen again to $1,855, then $1,835 by May 11. It rose a bit later that day, but continued falling further from there, sinking below $1,790 on May 16.
On May 17, gold recovered a bit, rising to $1,835. Despite the trouble its had in the past day, it is currently trading at $1,840.
Gold prices bounced back due to a drop in U.S. dollar and treasury yields. The drop, in combination with a slide in risk assets, rekindled demand for the safe-haven bullion amid worries about global growth.
“The dollar is going down and it’s quite natural that gold is appreciating,” said Carlo Alberto De Casa, external market analyst at Kinesis. “Unless the U.S. dollar continues to strain and inflation continues to fight, I don’t see other reason for new, big falls in gold.”
Largely associated with cryptocurrencies, Coinbase has also tumbled recently, in conjunction with lower-than-expected quarterly results.
On March 30, COIN was trading just above $200. Over the course of the following month, it seemed to inch down in an almost linear fashion, losing roughly $10 every two trading days, before halting at $120 support at the end of the month.
While keeping this price point going into May, by the 5th it started falling more precipitously, dipping below $50 on May 12.
While it recovered a bit since then, it is still trading just below $70.
Coinbase’s first-quarter results missed analysts’ revenue estimates, causing shares to slide more than 15% in after-hours trading, while compounded with a drop of 12.6% during regular trading hours before the release. Revenue fell 27% from a year ago to $1.1 billion, while also reporting a net loss of $430 million in the first quarter.
Coinbase also spooked its users with a proviso hidden in its 10-Q quarterly report mandated by the SEC.
“In the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.”
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