After the price of Bitcoin plunged 50%, companies that have supported and sponsored bitcoin are now feeling the repercussions. Overstock, for example, has part of its wealth in digital assets. Both companies lost money this week. Overstock lost $200 million after Wednesday’s Bitcoin crash, loss of 11%.
The crash also affected payment services like Square Inc that have integrated Bitcoin into their mobile app. Square lost 5% this week to the tune of $90 million. While these losses are modest compared to the drops suffered by Bitcoin itself. The timing suggests a correlation between the two. Firms looking to back Bitcoin should take heed. The rapid soars and drops in the value of bitcoin and other cryptocurrencies could lead to similar spikes in companies’ net worths, albeit on a smaller scale.
Another way companies have felt the effects of Bitcoin’s crash relates to the recent trend of firm’s rebranding to benefit off Bitcoin mania. There are some companies that have shifted emphasis to digital currency exchange, and some that have even changed their names to reflect interest in cryptocurrency. Kodak, for instance, is launching a new cryptocurrency named KodakCoin to help the company bounce back from the collapse of the photo industry. Earlier this month, shares in the firm jumped almost 120% after Kodak announced plans to mint its own digital coin, along with plans to establish Bitcoin mining rigs in Rochester, New York at the company’s headquarters.
After the Bitcoin crash, Kodak saw a drop of 8%. Likewise, Long Island Iced Tea changed their name to Long Blockchain in December of 2017 They saw their stocks swell by 200%. However, shares of Long Blockchain only decreased 2% this week. If Bitcoin recovers fast enough, this could still be a plausible strategy for companies looking to diversify.