Coinbase Stock, Strategy, and Circle Aren't Binance. Crypto Investors Should Still Worry. — Barrons.com
By Jack DentonCryptocurrency stocks fell Friday as the digital-asset space reckoned with a $6.3 billion hack at Binance, the largest crypto exchange.Coinbase stock declined 13%, with the Binance hack erasing any investor goodwill from the crypto exchange's surprise third-quarter profit reported after the bell on Thursday.Circle Internet dropped 8.7% as the issuer of currency-backed tokens also felt the pain, and Strategy stock lost 6.2% as the Bitcoin proxy play via its massive crypto treasury suffered amid the parallel decline in Bitcoin prices.Strategy stock's decline is based on its exposure to Bitcoin, which dropped 4.5% over the last 24 hours.Coinbase and Circle are now in the security spotlight, even if there's nothing to suggest they are particularly vulnerable to a similar hack. Both companies have shown that you can forge a path in the Wild West of crypto by trying to be as regulated as possible. It would be a good bet that both companies have the best cybersecurity money can buy.But the Binance hack underscores how even the biggest players and systemic pillars in crypto have a target on their back in a digital asset economy that has a long history of panics. There are few signs of widespread contagion so far, but if crypto traders are spooked by the Binance hack — and they could be — trading volumes could fall across crypto and stablecoin usage may also slip.That would be bad for the businesses of both Circle and Coinbase. A $6.3 billion cyberattack on the largest crypto exchange could also reignite regulatory pressures across the sector.As the shine continues to fade from crypto, with Bitcoin down almost 40% from its all-time high a year ago and Coinbase and Circle's record-high stock prices a similar distant memory, the Binance hack is nothing but bad news.Write to Jack Denton at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.