This week, leading cryptocurrency stocks outperformed the overall stock market, buoyed by stable prices in the crypto space.
Following President Trump’s announcement of new tariffs on April 2, the stock market faced two tumultuous days. By Friday evening:
- The S&P 500 closed down by 6%
- The Nasdaq Composite fell by 5.8%
- The Dow Jones Industrial Average dropped more than 2,200 points, translating to around 5.5%
- The Russell 2000 Index, which tracks small-cap stocks, declined by 4%
The Nasdaq has seen a 22% drop since its peak in December, while the S&P is down roughly 17% from its February high.
In contrast, some crypto-related stocks demonstrated stronger performance this week. Strategy, previously known as MicroStrategy and founded by Bitcoin advocate Michael Saylor, surged by over 6.7%.
Coinbase, the largest crypto exchange in the United States, dipped only 3%, while Marathon Digital, Cipher Mining, and Riot Platforms each experienced declines of less than 5%.
These stocks outperformed both the S&P 500 and Nasdaq 100 indices largely because Bitcoin (BTC) and other prominent cryptocurrencies like Ethereum (ETH), Ripple (XRP), and Binance Coin (BNB) remained relatively stable.
Over the past week, Bitcoin’s price rose by 2.5%, while XRP gained 2.7%. Ether and BNB continued to consolidate. Historically, these cryptocurrency stocks tend to follow the trajectory of Bitcoin and major altcoins.
A key driver behind Bitcoin’s positive performance might be a supportive statement from Larry Fink, the CEO of BlackRock. In his annual letter to investors, he warned of the rising risks the U.S. dollar faces due to Bitcoin, highlighting the increasing U.S. debt as a significant threat to the economy.
Bitcoin has also maintained its ground as investors increasingly see it as an alternative to gold, the traditional safe-haven asset, whose price has reached record highs.
Crypto stocks insulated from AI and tariffs
Another major factor contributing to the relative success of crypto stocks is their limited exposure to the artificial intelligence sector.
There are growing concerns among investors and analysts that the AI-driven momentum that has propelled the stock market in recent years is beginning to wane. This trend has contributed to the underperformance of top AI stocks like AMD, NVIDIA, and SoundHound compared to the broader market.
These concerns escalated this week when reports confirmed Microsoft’s plans to slow down its global data center investments. Some analysts have warned of a potential oversupply of data centers relative to demand.
Crypto stocks have also remained stable due to their minimal ties to Trump’s trade policies. The reciprocal tariffs are unlikely to impact these companies given their business models. For instance, the primary focus of Strategy is on accumulating Bitcoin, with its software services playing a lesser role.
Crypto stocks have also shown resilience after it was revealed that Paul Atkins is likely to be confirmed as the next head of the Securities and Exchange Commission, moving forward from the banking committee.