It's a rough session for equities in general and crypto stocks in particular after Thursday morning's Consumer Price Index (CPI) report showed core inflation in September unexpectedly rising to a four-decade high of 6.6%. Headline inflation was 8.2%, also topping economist forecasts.
The news sent bitcoin (BTC) tumbling to $18,100 – not far off from its 2022 low of $17,600. At press time, the price has bounced modestly to $18,400. The major U.S. stock market averages all fell more than 2%, but are currently trying to mount a mid-morning bounce, with the S&P 500 narrowing its decline to just 1%.
Among the mining stocks, Marathon Digital (MARA) is trading lower by 7%, with Riot Blockchain (RIOT) and Core Scientific (CORZ) down similar amounts. U.K. miner Argo Blockchain (ARBK) continued to underperform the rest of the sector, down 16.5% to add to its losses following last week's decision to raise capital.
In an Oct. 12 research note, Roth Capital analyst Darren Aftahi downgraded his recommendation on Argo to neutral from buy, with a $2 price target. While Argo has taken steps to stabilize its balance sheet, wrote Aftahi, growth will become limited and the company may begin to lose market share versus other miners. Rising power costs alongside stagnant bitcoin prices are also a headwind for the company's margins, he said.
MicroStrategy (MSTR), the company that holds 130,000 BTC ($2.4 billion worth, and falling), is lower by 6.7%, while crypto exchange Coinbase (COIN) is down 11.5%.
UPDATE (Oct. 13, 2022 15:40 UTC): Updates with commentary on Argo Blockchain's stock downgrade.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.