Crypto fever has captivated San Francisco over the past decade, giving rise to some of the industry's most high-profile companies and wooing billions in VC investment from firms like a16z and Paradigm.
But events this week have doused that rabid enthusiasm and put some major companies in incredibly vulnerable positions, due to a marketwide rout in prices.
As of publication, bitcoin has dropped below $29,000 from almost $40,000 just a week ago, while ethereum dropped to $2,080, falling about 30% over the past seven days, according to CoinMarketCap. A "stable coin" called UST, which is supposed to be pegged to the U.S. dollar, dropped to a low of 30 cents but has recovered to 75 cents. Luna, a coin developed by the same company as UST, plummeted a whopping 90% in a single day on Wednesday.
All this panic selling may prove too much to bear for some of these companies reliant on continued hype around crypto as investors are fleeing the space. Here are just a few.
Coinbase
While Coinbase (NASDAQ: COIN)declared it was no longer headquartered in San Francisco last year, to us it still remains a product of the city with a big employee base. The cryptocurrency exchange's stock price has fallen 57% over the past five days to $53.72. Its woes began earlier in the week when a disappointing earnings call revealed a $430 million loss in the first quarter and a 19% drop in monthly users. Its users also balked at an update to risks associated with using the platform in its SEC filing, which implied that users could lose their assets stored on the platform if the company goes bankrupt.
Bolt Financial Inc.
While Bolt is not a crypto-focused company, instead offering one-click checkout solutions in fiat currency, the company did spend $1.5 billion in April on crytpo startup Wyre, which offers cryptocurrency to fiat exchange services. If cryptocurrencies continue to free fall and shed users, Wyre could turn out a sour investment for Bolt, which is already in tough straights following a lawsuit by one of its largest clients and an expose in the New York Times alleging the company was inflating its metrics.
Solana
Solana is the ninth largest cryptocurrency in the world with a market cap of over $16 billion, and the company behind the blockchain is based in San Francisco. Solana's price has dropped 26.3% in the past 24 hours to $48.90, down from a high last November of $260. It's hard to imagine the company will achieve its heights in 2021 any time soon.
Binance US
Just last month the cryptocurrency exchange raised a staggering $200 million in a seed round valued at $4.5 billion. It already feels like a lifetime ago, and there is no doubt investors will begin changing their tune on the size of funding rounds and valuations of crypto-related companies. Binance US is the spinoff of the world's largest cryptocurrency exchange Binance, which came about as a matter of necessity after the U.S. Department of Justice opened an investigation into money laundering connected to the company.
