Crypto Rally Falters as Trump Tokens, Stocks Come Under Pressure
A television broadcasts cryptocurrency market information on the floor of the New York Stock Exchange (NYSE) in New York in July.
(Bloomberg) — As stocks and bonds surge on growing confidence that the Federal Reserve will soon cut interest rates, cryptocurrencies are refusing to join the rally.
Most Read from Bloomberg
Digital assets and related equities extended losses Thursday, with some of the steepest declines hitting tokens and companies tied to ventures associated with Donald Trump’s family, many of which took off thanks to his pro-crypto policies.
Shares of ALT5 Sigma Corp., a treasury company holding the WLFI token of Trump-linked decentralized finance project World Liberty Financial Inc., slumped around 12%. The stock is down more than 50% in the past week. The WLFI token dropped about 25%, and is down around 50% since its debut on Labor Day. American Bitcoin Corp. — the mining outfit which starting trading Wednesday that Eric Trump is involved in — dropped by as much 22%.
To help ease concern, World Liberty held a live event on CoinMarketCap’s website that was attended by more than 2,000 people on Thursday. “The World Liberty Financial team is focused on building and shipping best-in-class products like USD1 that can bring the power of DeFi to millions globally,” a spokesperson told Bloomberg News.
Also weighing on sentiment is concern over a possible pushback against the spate of publicly digital-asset treasury companies investing in various tokens that have sprung up in recent months. Shares of many of the so-called DATs surged after many of the formally struggling companies pivoted to crypto.
The Information reported Thursday that Nasdaq, where a majority of these companies are listed, is requiring some of the token holding firms to receive shareholder approval before issuing shares for token purchases. Share offerings have become a popular way for treasury companies to raise more funds to buy more coins, a model pioneered by Strategy’s Michael Saylor. The treasury firms have been using this strategy to purchase coins without taking on more debt.
To date, 184 publicly traded companies have announced their intention to raise more than $132 billion to buy various coins, according to Architect Partners, a financial advisory firm.
“The NASDAQ decision is certainly perfectly consistent with the rights afforded shareholders,” said Eric Risley, founder and managing partner of Architect Partners. “Full disclosure and an opportunity to have a say should be expected and demanded if not provided for. Yes, likely slows the pace of transaction velocity but perhaps a good thing.”