Despite a major shift toward crypto-industry-friendly policy in the past few months, the first quarter of the year was not as lucrative for those companies as many had expected. Shares of Coinbase, the leading crypto exchange in the U.S., suffered their worst quarter in two years, weighed down by growing concerns over an economic slowdown.
Shares of Coinbase fell 31% between Jan. 1 and March 31, erasing all of the gains the company made late last year amid excitement over Trump’s pro-crypto agenda. Riot Platforms, a Bitcoin mining company, fell more than 30%, and Core Scientific, another Bitcoin mining firm, fell nearly 50%. Galaxy Digital Holdings, a crypto conglomerate, fell 40%. Cryptocurrency prices themselves have also been on the decline, with Bitcoin losing 10% of its value since the start of the year.
The downturn comes as President Donald Trump escalates a trade war with some of America’s closest allies, implementing expansive tariffs that some investors fear will increase inflation and lead to a recession. The recent downturn in crypto prices is a “direct result” of these broader macroeconomic concerns in the U.S. and abroad, Michael Colonnese, a crypto analyst at investment bank H.C. Wainwright & Co., told Fortune. “Tariff headlines have been a big, big headwind with non-equity markets and digital asset prices,” he said.
While the uncertainty has triggered fears across the entire economy, leading the S&P 500 to close the quarter with its worst performance since 2022, crypto has suffered more than traditional markets. Cryptocurrencies and related stocks often fall more than average securities in times of economic uncertainty because they are seen as risky assets, leading investors to offload their holdings in an attempt to mitigate portfolio risk, Colonnese says.
“Whenever you see a correction in traditional risk assets like equities, you usually see a more amplified drawdown in crypto asset prices,” he said. “That flows through directly to Coinbase stock.”
Crypto prices were further impacted in Q1 by disappointment over the president’s digital asset policy. In early March, Trump announced a national Bitcoin reserve that will only consist of crypto that the government currently holds. Bitcoin fell 6% on the news as investors were disappointed that the plan did not direct the government to make large purchases of the currency to expand the reserve, which many believed would increase Bitcoin’s price.