Bitcoin-play stocks are suffering right now- and DPW Holdings Inc (NYSE:DPW) is no exception. Shares in DPW are down by over 14% in today’s trading as the Bitcoin hype train reverses at high speed. This builds on losses already experienced by the company over the last five days, with shares plunging from $2.15 to the current share price of $1.39. Indeed, if you want to see just how far DPW has fallen then note that in December the stock was trading at an impressive $5.50.
So what is hurting the stock so much? The answer is simple: the fortunes of DPW are very closely linked to the fortunes of Bitcoin (BTC). And Bitcoin is looking extremely volatile right now. One of the company’s key subsidiaries is Super Crypto Mining, Inc. which runs a website ‘that leverages its engineering expertise and existing locations to create crypto currency mining facilities across the globe.’ Indeed, the company’s plan was described as establishing a network of over 10,000 digital mining machines. Excitement over this subsidiary in relation to booming bitcoin prices helps explain the stock’s huge December run leading to a peak of over $5- which as you may note is also when Bitcoin peaked at close to $20,000.
Now however those days seem long gone with Bitcoin is down to its lowest levels since November 18. A whopping $60 billion has been wiped off the value of cryptocurrencies. Bitcoin itself has now dropped below $8,000. The reasons behind the drop are making crypto investors very nervous- from the prospect of much stricter regulation in key crypto markets like China and India- to the news that UK bank Lloyds has banned crypto purchases with its credit cards. Three major banks have already taken this killer move- namely Citigroup, Bank of America and JP Morgan.
At the same time- in complete contrast to the bearish moves of these major financial firms- Digital Power announced a very ambitious plan to launch a network of cryptocurrency ATMs at the end of January. The plan is for these ATMs to allow for the purchase and sale of cryptocurrencies along with cash withdraws. At first the ATMs will only be installed in 5 locations associated with the company and will offer Bitcoin (BTC), Bitcoin Cash (BTH), Ethereum (ETH) and Litecoin (LTC). However, the company said it intends for other cryptocurrencies to be included later.
“Our primary mission is to be a pro-active lender and facilitate the national distribution of crypto ATMs while the traditional banking industry does not serve the cryptocurrency market” said DPW CEO in a statement. However- a word of caution- the company did note that the plan may still be subject to regulatory review before these crypto ATMs can become a reality.
Finally, some commentators have suggested that a currency called tether- which as the name may suggest is linked and backed by the dollar- is propping up crypto prices by as much as 40% right now. The crucial point is that Tether has yet to provide any audits that actually prove its reserves truly exist. If that is true- and you deduct 40% from current prices- then bitcoin would actually be worth less than $5,000 right now, suggesting that further troubles lie ahead for DPW stock.