Companies that have seen their fortunes and share prices soar with the crypto-craze are now facing a little bit of a reality check.
As Bitcoin slumped up to 20% to almost $11,000 (€8,990m), and its biggest rival Ethereum dropping 23%, and Ripple tumbling up to 33%, firms that touted their links to the burgeoning blockchain industry, including Riot Blockchain, Overstock.com and DPW Holdings, have seen their shares tumble.
Cryptocurrencies fell as investors speculated about the prospect of regulatory crackdowns for the decentralised market. DPW Holdings’ Coolisys Technologies unit is working on advanced technology power systems for digital mining of cryptocurrencies.
Riot Blockchain, which rebranded as a blockchain company in October, fell up to 13% while Overstock.com, exposed to the craze through a subsidiary called Medici Ventures, fell 8%.
Eastman Kodak, which saw its shares jump almost 200% last week after the company said it is working with Wenn Digital to offer a blockchain-based service for paying photographers, declined up to 13%, while Metropolitan Bank — the issuing bank for a bitcoin debit card called Shift Card — was also down at one stage in the latest session.
Still, not all bitcoin-linked companies are falling. Long Blockchain, the unprofitable iced-tea company formerly known as Long Island Iced Tea, is little changed after earlier rising as up to 9.2%. “It’s mainly been regulatory issues which are haunting the cryptocurrency, with news around South Korea’s further crackdown on trading the driver today,” said Think Markets chief strategist Naeem Aslam.
“But we maintain our stance. We do not think that the complete banning of cryptocurrencies is possible,” he said. Professor Daniele Bianchi, who researches cryptocurrencies at Warwick Business School, said the increasing value of cryptocurrencies “is not only good for investors, but also brings attention from regulators and policymakers”.
“The situation is not the same across countries, however. While the South Korean and the Chinese governments are planning to take decisive steps in monitoring and limiting trading in cryptos, the Russian government has drafted a new bill for the legalisation of cryptos trading in authorised platforms,” he said.
Meanwhile, figures show that although Bank of America may not be willing to help customers invest in Bitcoin, it has applied for or received at least 43 patents for blockchain, the ledger technology used for verifying and recording transactions.