Since the start of 2018, the overall cryptocurrency market has struggled to maintain a recovery from its multi-month downtrend. In accordance with increased selloffs, companies heavily vested in the nascent digital asset class are starting to face drawbacks.
Overstock Shares Plummet Despite tZERO Investment
Online retail giant Overstock.com Inc. entered the cryptocurrency sector when it launched decentralized exchange tZERO in 2017.
t0.com (tZERO), a majority-owned subsidiary of Overstock, was established with the mission of integrating commercial-scale blockchain applications into the financial sector through a new security token software.
The recent selloffs in cryptocurrency, sending Ethereum and Bitcoin prices below key support levels, have catalyzed falling market sentiment for both digital assets themselves and the companies backing them. Overstock (OSTK) share prices declined 21 percent this week, marking total net losses of approximately $65 million in Q2 2018 thus far, according to MarketWatch.
The retail giant’s red week follows GSR Capital’s $270 million investment round in tZERO earlier this month.
In total, GSR will invest up to $374.55 million in tZERO in exchange for common equity in both the blockchain subsidiary and Overstock.
The purchase agreement also states that GSR will buy $30 million in tZERO security tokens from Overstock in addition to 3.1 million shares of OSTK common stock.
Following news of the investment, Overstock share prices increased nearly 21 percent in after-hours trading on Aug. 10. During the trading day, OSTK rallied 4.47 percent and closed at $38.60, reports CNBC. At press time, OTSK share prices have fallen to the $30-$31 range.
Galaxy Digital Shares Fall 20 Percent After Going Live on Canadian Exchange
Bitcoin billionaire Mike Novogratz’s cryptocurrency-focused merchant bank Galaxy Digital LP started trading on Canada’s TSX Venture Exchange (TSX-V) on Aug. 1.
Galaxy Digital (GLXY) shares were valued at 5 Canadian dollars per share during its January 2018 private placement. The stock opened at CA$2.75 and fell almost 20 percent within the first half hour after listing.
Reflecting on the stringent approval process, Novogratz said that Canadian regulators took longer than he expected to list Galaxy on the exchange.
“If I knew what I know now, knew the crypto markets were going to swoon as much, and it was going to take so long, I might have stayed private for another year or so and then gone public.”
While Galaxy was awaiting approval, the bear market dragged cryptocurrency prices toward monthly lows and the company suffered a significant first-quarter loss. According to a press release, Galaxy Digital reported unrealized losses of around $134 million across its digital asset and equity investments in Q1 2018.
With emerging regulation and institutional solutions on the rise, it’s evident that the overall cryptocurrency market is facing a downtrend in its transition toward legitimacy.
Cover Photo by Yeshi Kangrang on Unsplash