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 cryptocurrency recovered some losses later Wednesday, climbing back to $40,151 at 1:30 p.m. ET.

“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, longtime bitcoin bull, told CNBC’s “Squawk Box.” “The market will consolidate. It will find a bottom somewhere. I’m hoping its close to here.”

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.

Musk later Wednesday morning indicated Tesla is not selling its large amount of bitcoin amid the cryptocurrency’s drop. Tesla fell roughly 3% midday Wednesday.

Crypto-related stocks drop amid bitcoin’s slide

Microstrategy, which made headlines by buying a significant amount of bitcoin for its corporate treasury, tanked by around 8%.

Coinbase, the newly public crypto exchange, dropped roughly 6% after trading began. The website appeared to be down for some users Wednesday morning, but the company said it resumed service later a few hours later.

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 — fell Wednesday morning before rallying back through the day. Square ticked down roughly 2% and PayPal was down about 0.2%.

Nvidia also dropped, then recovered later Wednesday with shares down 0.6%. 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, fell about 4% Wednesday.

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— CNBC’s Michael Bloom contributed reporting.


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