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Tesla, Coinbase lead drop in crypto-related stocks as bitcoin plunges

SpaceX founder and Tesla CEO Elon Musk looks on as he visits the construction site of Tesla’s gigafactory in Gruenheide, near Berlin, Germany, May 17, 2021.

Michele Tantussi | Reuters

Cryptocurrency related stocks led by Tesla and Coinbase dropped on Wednesday as bitcoin plunged the equivalent of a bear market in just a single day.

Bitcoin at its low point of the day was down more than 30% on the session to $30,001.51, its lowest since late January, according to Coin Metrics. The price was last down 21% to $33,993.78 as of 9:28 am ET. The cryptocurrency has been cut in half since hitting an all-time high above $64,000 in mid-April.

The move comes after China on Tuesday barred financial institutions from conducting crypto-related transactions. Separately, a JPMorgan report showed large institutional investors were dumping bitcoin in favor of gold.

The pullback this month in bitcoin intensified a week ago after Tesla CEO Elon Musk appeared to change his tune a bit on crypto by saying the company would stop accepting bitcoin for payment because of environmental concerns surrounding crypto-mining.

“You had a confluence of events…where you started breaking down the positivity in the price action, and now we’ve got a liquidation event,” Galaxy Digital CEO and Chairman Mike Novogratz told CNBC’s “Squawk Box.” “It’s not going to bounce right back. It’ll consolidate for a while.”

Tesla, still a large holder of bitcoin, fell 4% Wednesday morning after markets opened. Microstrategy, which made headlines by buying a significant amount of bitcoin for its corporate treasury, tanked by 11%.

Coinbase, the newly public crypto exchange, dropped 9% after trading began. The website appeared to be down for some users Wednesday morning.

Bitcoin’s price approached $65,000 five weeks ago before peaking, around the time of Coinbase’s public debut.

“Coinbase’s trading debut coincides with the top for Bitcoin and many traders can’t make a convincing argument that it will be able to recover all those losses since then,” said Edward Moya, senior market analyst at OANDA.

Square and PayPal — which facilitate transactions in cryptocurrencies and have been big buyers — were also lower 4.3% and 1.5% respectively, Wednesday morning.

Nvidia ticked down 3% after trading began. The company manufactures chips used in crypto-mining, but reportedly trying to curb their use for that purpose.

Grayscale Bitcoin Trust, the popular trust holding a large amount of bitcoin, sunk nearly 15% Wednesday morning.

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CNBC’s Michael Bloom contributed reporting.

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