Coinbase, Circle, Robinhood Fall 40-56% in Stealth Bear Market

This downturn occurs as Bitcoin continues to fall beneath the $80,000 threshold, even though the S&P 500 has maintained its high ground.

The situation, which Kobeissi labels a stealth bear market, stems from a highly concentrated performance within the S&P 500; only ten stocks have accounted for 70% of the index’s gains since March 30. This narrow leadership masks significant losses occurring in other sectors, notably those tied to cryptocurrency, which are not reflected in the main index figures.

Among the twenty technology companies identified by Kobeissi as being in bear market territory, AppLovin leads the pack with a 65% drop. Coinbase occupies the third spot, having fallen 56%, while Circle shows a 44% decrease, and Robinhood registers a 40% decline. The full list of these lagging technology stocks includes CoreWeave at -57%, Western Digital at -52%, Oracle at -50%, Arm Holdings at -49%, Sandisk at -42%, and others.

Regarding the broader market, Nvidia alone contributed 13% to the index's appreciation; however, Micron and Alphabet are also among the top contributors, currently trading 24% and 28% below their respective highs. Data from mid-October revealed that the Fed was pricing in three further interest rate increases by June 2027, contrasting with prior market expectations of three rate reductions at the beginning of 2026.

Circle, which issues USD Coin (USDC) and derives much of its income from interest on reserves, experienced an intraday dip of about 11% in September following a legislative setback concerning the crypto market structure bill from a Senate CLARITY Act vote. Robinhood managed to post record third-quarter revenue totaling $1.4 billion, yet its diluted earnings per share diminished by 16% compared to the previous year.

Bitcoin (BTC) is presently struggling to sustain its upward momentum above $80,000, repeatedly falling short of this level. Furthermore, a buyback of US Treasury bonds that reached its $6 billion limit on Tuesday failed to provide any upward lift to the price, confirming BTC's retreat below $80K.

Looking ahead, Coinbase is set to release its third-quarter financial results after the market closes on Thursday. Analysts are forecasting a loss, given that revenue expectations near $1.2 billion would represent a 36% reduction from the prior year, alongside a 20% year-over-year decrease in consumer transaction revenue to $452 million during the second quarter. Spot trading volume also saw a 25% decrease when comparing the second quarter to the first.

Economist Peter Schiff drew a parallel between the limited breadth observed last month and periods in 1973 and 1999-2000, suggesting these times preceded substantial 50% declines, according to reports from Stocktwits. Conversely, Kobeissi anticipates a sharp market rebound should pressures related to energy and interest rates lessen, though this positive outcome hinges on the index’s breadth expanding beyond the ten stocks currently driving its performance.

Why it matters

This divergence shows significant weakness in crypto-linked equities that is hidden from headline market indices. Investors should watch Coinbase's upcoming third-quarter report for further insight into crypto market health. Market sentiment is currently fragile despite some S&P 500 strength.