Stock market crash warning: 3 blockchain stocks to avoid

The outlook for cryptocurrencies seems to change like the weather. Only a month ago, the whole world was optimistic about crypto. Bitcoin (BTC-USD) The halving event is approaching, when the available supply of BTC that can be mined will be reduced by 50%. Past halving events have led to parabolic moves that have increased cryptocurrency prices. Not this time. Since the halving, the price of Bitcoin has fallen. After reaching an all-time high of around $74,000 in March, before the halving, the price has fallen to $58,000 in recent weeks.

The decline has led to a rethinking of cryptography. investment bank Chartered standard (LON:STAN), one of the biggest bulls in crypto, now claims that the price of Bitcoin could fall as low as $50,000. He previously predicted that the price of Bitcoin would reach $100,000 by the end of the year. In revising its price forecast, Standard Chartered highlighted recent outflows from spot Bitcoin exchange-traded funds (ETFs) after several months of rapid inflows. The bank also noted that risky assets such as crypto are losing favor with investors due to the slowdown in the US economy.

Here’s a stock market crash warning: don’t get caught out by holding these three blockchain stocks.

Block (SQ)

Payment company Block (NYSE:S.Q.) just unveiled a new dollar cost averaging program to steadily add to its stake in Bitcoin. Block says it has started using 10% of its monthly Bitcoin gross margin to buy even more BTC. He plans to carry out this plan for the remainder of 2024 and beyond. Block already has substantial exposure to Bitcoin, owning over 8,000 tokens currently valued at $4.7 billion. Analysts and some investors have expressed concerns about Block’s exposure to BTC, seeing it as a vulnerability.

Block CEO Jack Dorsey is a crypto bull, having renamed the company that was formerly known as “Square” to reflect his growing interest in blockchain technologies. Block appears to be trying to allay people’s concerns about its BTC investments, unveiling as part of its results a new “Bitcoin Plan for Corporate Balance Sheets” in which the company outlines its process for buying Bitcoin and insurance and accounting for its crypto assets. Still, nearly $5 billion worth of BTC is a lot for Block, a payments company.

MicroStrategy (MSTR)

If the crypto market collapses, MicroStrategy (NASDAQ:MSTR) will probably fall the hardest. The company spent the first quarter of this year raising as much money as possible to buy as many Bitcoins as possible, as the price of the largest cryptocurrency hit an all-time high of just under 74,000 $ in mid-March. Michael Saylor, CEO of MicroStrategy, is a crypto evangelist who continued to buy Bitcoin ahead of the halving event in April.

At last count, MicroStrategy owned just over 214,000 Bitcoins valued at approximately $13.5 billion based on the current price. Although technically still a business intelligence software company, Saylor called MicroStrategy a “Bitcoin development company.” Despite some concerns among shareholders, Saylor said his goal was to accumulate as much Bitcoin as possible. Indeed, MicroStrategy continued to purchase BTC in the first quarter of this year, even as the price reached record levels.

Coinbase (COIN)

It’s very high now, but the fortune of cryptocurrency exchange Coinbase (NASDAQ:PIECE OF MONEY) will certainly change in the event of a stock market crash. Coinbase has seen its profits rise in recent months amid the crypto rally. The largest cryptocurrency exchange in the United States benefited from a surge in cryptocurrency trading during the first quarter of this year as the price of Bitcoin hit a record high. In the first quarter, the company’s earnings per share (PES) increased by 303% compared to the previous year.

Consumer transaction revenue in the first quarter of this year increased by more than 100% compared to last year. Total transaction revenue tripled in the quarter to $1.08 billion. Coinbase performs well whenever Bitcoin and other cryptos rally, leading to increased trading volumes and revenue. The company also received a boost in the first quarter of this year after the US Securities and Exchange Commission (SEC) approved Bitcoin spot exchange-traded funds (ETFs) in the US.

However, if we experience another crypto winter, investors won’t want to find themselves holding COIN shares. During the 2022 bear market, Coinbase’s stock price fell 90%.

On the date of publication, Joël Baglole did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com’s publishing guidelines.