Coinbase and ARK Tumble as Crypto Crash Spills Over Into Stock Market

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A fall in crypto prices is weighing on stocks.

Dreamstime

Monday’s double-digit plunge in Bitcoin and Ether spilled into the stock market, dragging down companies and funds with exposure to digital assets.

Shares in Coinbase Global (ticker: COIN), a major cryptocurrency exchange, tumbled 16% in early trading, immediately shedding $1.5 billion in market capitalization to open at $46.17, down from $58.71 on Friday.

The ARK Innovation ETF (ARKK), which has holdings of Coinbase that account for more than 4% of the fund, lost 6.5%. The exchange-traded fund’s parent company, Cathie Wood-led Ark Investment Management, is the single largest institutional owner of Coinbase. 

Coinbase stock has fallen more than 80% this year on a fall in Bitcoin and a slowdown in trading volumes. 

Ark increased its position, valued in the hundreds of millions of dollars, by 28% at the end of March—when Coinbase was trading around $190 a share. 

Other fund managers also have scooped up more shares: Morgan Stanley (MS), Barclays (BCS), BlackRock (BLK), and Vanguard are three other institutional investors that have increased their Coinbase position in the past few months, according to FactSet data.

Shares in other companies with significant crypto holdings or actively engaged in business operations in the digital asset space were tumbling as well.

Fintech group Block (SQ) fell 8% while Silvergate Capital , which is positioning itself as a crypto bank, lost 15%. MicroStrategy (MSTR), a software group with major holdings of Bitcoin on its balance sheet, plunged 25%. Bitcoin miners Riot Blockchain (RIOT) and Marathon Digital (MARA) both dropped about 12%.

Bitcoin retreated has 14% in the past 24 hours to below $23,500 and Ether has lost 17% to $1,200. The market capitalization of cryptocurrencies has dropped below $1 trillion over the past day.

The digital asset space has come under similar pressures as the stock market: red-hot inflation raises the prospect of aggressive monetary policy from the Federal Reserve and other central banks worldwide, which risks causing a recession.

But stresses in the crypto market itself, including a crisis at crypto lender Celsius, has exacerbated the digital asset selloff.

Write to Jack Denton at jack.denton@dowjones.com