​A drop in cryptocurrency-linked stocks in the wake of Bitcoin’s slide and Coinbase Global Inc.’s choppy debut is stirring a rallying cry from optimists who reject fears that the sector has peaked.

A global, Bloomberg-curated basket of equities linked to crypto trading or Bitcoin mining fell some 9 per cent over the past week, paring 2021’s climb to about 130 per cent. A weekend Bitcoin plunge rattled crypto mania, but the token has since pared some losses and remains up 690 per cent over the past year.

“The public market validation of Bitcoin and the entire space from Coinbase’s listing will encourage people who can invest in the markets to do so,” said Jehan Chu, managing partner at crypto adviser Kenetic Capital in Hong Kong. There are signs retail investors took advantage of Bitcoin’s fall, he added.

Bitcoin climbed as much as 2.3 per cent on Monday, and was trading at US$56,691 as of 6:08 a.m. in New York.

Day traders have also pushed up stocks such as Bitcoin miner Marathon Digital Holdings Inc. and crypto broker Voyager Digital Ltd., which are up at least 8,900 per cent in the past year. For some, the US$68 billion market value for digital-token exchange Coinbase justifies bets on a watershed advance in crypto adoption. Others fear the listing and Bitcoin’s gyrations are part of an unsustainable, stimulus-fueled frenzy.

“Passions run deep” on the short-term crypto outlook “but dips are clearly supported,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note Monday.

Coinbase, the biggest U.S. cryptocurrency exchange, was down 2.6 per cent in U.S. pre-market trading after closing at US$342 on Friday, off a peak of US$429.54 hit in the first few minutes of its April 14 debut. Marathon and Voyager lost about 20 per cent last week.

On Monday in Asia, shares in firms such as Japan’s Monex Group Inc., which owns a crypto exchange, and Woori Technology Investment Co. -- which has a stake in a leading South Korean digital-token broker -- were in the red. Cryptocurrency-linked stocks also fell in the U.S. premarket, with Riot Blockchain Inc. down 8.4 per cent and Marathon slipping 7.2 per cent

Still, analysts who have begun covering Coinbase are bullish, on average penciling in a 52 per cent climb over the next year. The firm’s Chief Executive Officer Brian Armstrong described the listing as a shift in legitimacy for the entire cryptocurrency industry.


The fact that more sell-side analysts will be forced to engage with the digital-token sector is a positive development for it, according to PwC’s Hong Kong-based Global Crypto Leader Henri Arslanian.

“It forces now the sell-side firms to cover Coinbase and crypto in a more practical and detailed way,” Arslanian said. “That’s going to bring not only more experience but also more expertise in the asset class.”

Many pitfalls remain: Bitcoin’s boom could yet turn to bust, and regulators are poised to tighten oversight of digital tokens and related businesses as they achieve more mainstream acceptance.

But for now the cryptocurrency craze continues. For instance, Dogecoin -- a token created as a joke -- nearly tripled to a market value of about US$50 billion on Friday. Demand was so brisk that investors trying to trade it on Robinhood crashed the site.

“It’s still early in the game,” said Dave Chapman, executive director with Hong Kong-based BC Technology Group Ltd., which operates the digital-asset platform OSL. “Opportunity remains for investors to participate and secure a first-mover advantage.”

--With assistance from Nisha Gopalan and Joanna Ossinger.