Strategy, Robinhood, and Coinbase Drop. Why Crypto Stocks Are Struggling.

People wait in line for T-shirts at a pop-up kiosk for the online brokerage Robinhood. (Spencer Platt/Getty Images)

Key Points

• Crypto stocks declined, with Strategy down 5.5%, Coinbase Global down 5%, and Robinhood Markets down 4.4%, following China’s trade countermeasures.
• Bitcoin’s price fell 4.3% over 24 hours, trading around $110,000, after China sanctioned U.S. subsidiaries and announced a trade probe.
• Strategy acquired 220 Bitcoins for $27 million at an average cost of $123,561 last week, a bet that has since decreased in value by 11%.

Crypto stocks were falling on Tuesday, after China spooked investors by rolling out a series of trade countermeasures against the U.S.

Shares in the Bitcoin treasury company Strategy , formerly known as MicroStrategy, slumped 5.5% in early trading. Crypto exchange Coinbase Global dropped 5%, and online trading platform Robinhood Markets fell 4.4%. The S&P 500 was 1.3% lower.

The moves came amid a selloff in cryptocurrency prices — Bitcoin was down 4.3% over the past 24 hours, according to data from CoinDesk. The world’s largest token sold off after China added five U.S. subsidiaries of South Korean shipping company Hanwha Ocean to its sanctions list, and said it would launch a probe into how the U.S.’s Section 301 investigation would impact its shipping and shipbuilding industries.

The trade uncertainty was incentivizing investors to pivot away from risk-on assets like cryptos into safer havens such as gold. When digital token prices fall, that tends to weigh on shares in crypto brokerages, exchanges, and treasuries, as it would be expected to drag down their revenue.

Strategy added to its Bitcoin holdings last week, according to a filing Monday. The company bought 220 Bitcoins in the week ended Oct. 12, for $27 million at an average cost of $123,561.

With the world’s largest cryptocurrency trading at around $110,000 early Tuesday, the value of that bet is already down 11% or so.

Investors will have to wait until Monday to find out if Strategy is buying the dip.

Write to George Glover at george.glover@dowjones.com