Crypto Stocks Show Why They’re Among the Riskiest of Risk Assets

tech.hindustantimes.com:

Crypto curious stock investors are taking little comfort in the rebound in the shares of companies linked to the digital-asset world in the past week, with the sector underperforming just about every other risky corner of the financial markets this year by a wide margin. 

Coinbase Global Inc., touted last year as one of the best ways to gain exposure to crypto when it was first listed on Nasdaq, has tumbled 75% since December. MicroStategy Inc. is down 62%, or more than Bitcoin, for which the software company has been seen a proxy for since Chief Executive Michael Saylor loaded up its balance sheet with the coins. Digital token mining leaders Marathon Digital Holdings Inc. and Riot Blockchain Inc. are down similar amounts, while smaller rivals such as Stronghold Digital Mining Inc. having plunged even more. 

As the second-quarter winds down, cryptocurrency-related stocks are being lumped in with the digital tokens as one of the world’s riskiest asset classes. The NYSE FactSet Global Blockchain Technologies Index has fallen 65% this year, underperforming not only Bitcoin, but also an index that tracks highly volatile so-called meme stocks as well as a gauge of special purpose acquisition vehicle names.

Crypto stocks are “essentially a leveraged bet on one of the riskiest risk assets that there is,” said Steve Sosnick, chief strategist at Interactive Brokers LLC. He added that there are only a few other bets that he’d considered a higher risk for investors including certain meme and penny stocks.

While outsized drawdowns by Bitcoin are nothing new across its roughly 12-year history, the most recent selloff has been particularly brutal given the scope of the losses seen across the broader crypto industry. In less than six