Top crypto stocks performed better than the broader stock market this week, helped by relatively stable cryptocurrency prices.
After President Donald Trump unveiled new tariffs on April 2, the stock market experienced two days of turmoil. By Friday evening:
- The S&P 500 closed down 6%
- The Nasdaq Composite dropped 5.8%.
- The Dow Jones Industrial Average plummeted more than 2,200 points, or about 5.5%.
- The Russell 2000 Index, a small-cap stock index, slipped 4%.
Since its December high, the Nasdaq is down 22%. Since its February high, the S&P is down about 17%.
Some crypto-related stocks did better than these equities during the week. Strategy, for example, rose by over 6.7%. The company, formerly known as MicroStrategy, was founded by Bitcoin bull Michael Saylor.
Coinbase, the biggest crypto exchange in the US, dropped by just 3%, while Marathon Digital, Cipher Mining, and Riot Platforms fell by less than 5%.
These stocks did better than the S&P 500 and the Nasdaq 100 indices because Bitcoin (BTC) and other major cryptocurrencies like Ethereum (ETH), Ripple (XRP), and Binance Coin (BNB) were relatively unchanged.
Bitcoin price rose by 2.5% in the last five days, while XRP rose by 2.7%. Ether and BNB remained in a consolidation phase. Historically, these crypto stocks track the performance of Bitcoin and other major coins.
A likely catalyst for the strong Bitcoin performance was a bullish statement by Larry Fink, the head of Blackrock. In his annual letter to investors, Fink warned that the U.S. dollar was facing an elevated risk from Bitcoin. He cited the rising U.S. debt as a big risk to the US economy.
Bitcoin also held steady as investors viewed it as an alternative to gold, the best-known safe haven asset whose price has soared to a record high.
Crypto stocks not exposed to AI and tariffs
The other main reason crypto stocks did relatively well is that they are not exposed to the artificial intelligence industry.
Investors and analysts are concerned that the AI theme that has driven the stock market in the past few years is slowing. This explains why top AI stocks like AMD, NVIDIA, and SoundHound have underperformed the broader market.
These risks rose this week after reports confirmed that Microsoft was slowing its investments in data centers globally. Some analysts cautioned that there was an oversupply of data centers compared to demand.
Crypto stocks also held steady because of their little exposure to Donald Trump’s trade war. The reciprocal tariffs will not affect these firms because of the nature of their business. For example, Strategy’s most important business is accumulating Bitcoin, with its software service playing a minor role.
Crypto stocks remained steady after odds that Paul Atkins would be confirmed to be the next head of the Securities and Exchange Commission as he advanced from the banking committee.
