Is the Gemini stock a buy after the $2.6 billion wipeout?

Gemini stock price crashed to a record low, continuing a trend that started soon after its initial public offering in September. 

Summary

• Gemini share price has crashed and triggered a $2.6 billion wipeout. 
• Its drop coincided with the sell-off in Bitcoin treasury companies.
• Technicals points to more downside, potentially to $5.

Gemini Space Station, which the Winklevoss Twins backed, plunged to a record low of $9.70, down by ~80% from its all-time high. Its market cap has dropped from $3.81 billion to the current $1.14 billion.

Why Gemini stock price crashed

Gemini is a top crypto exchange established by Tyler and Cameron Winklevoss in 2013. It went public in September, following in the footsteps of other crypto companies like Circle, Bullish, and Figure.

After initially soaring to $45, the stock started a free fall to the current $9.8. This plunge has coincided with the recent crypto market crash, which has affected Bitcoin (BTC) and other altcoins. 

It also mirrored the freefall of Bitcoin treasury companies like Metaplanet and Michael Saylor’s Strategy. Gemini is the 26th-largest Bitcoin treasury company in the world, holding 4,002 coins worth $372 million.

The stock has dropped due to the performance of Bitcoin and other altcoins over the past few months. In most periods, crypto exchanges experience low volume during bear markets. 

Unlike Coinbase, most of Gemini’s revenue comes from handling transactions. It does not have a large custody, stablecoin, or subscription business.

The company also published a mixed financial report. Its revenue jumped to $50.6 million in the third quarter from $24 million in the same period last year. However, its net loss jumped to $160 million from $87 million.

The rising losses mean that the company may opt to raise capital as it ended the quarter with $487 million in cash and equivalents. It also had $87 million in restricted cash and cash equivalents.

GEMI stock has also dropped as sentiment on newly listed companies has waned. Circle, which soared initially, has plunged, erasing over $40 billion in value. Similarly, Bullish stock has dropped by 65% from its all-time high. eToro and Webull, which also offer crypto trading solutions, have also plunged. 

Gemini Space Station stock analysis 

The two-hour chart shows that the GEMI stock price has been in a strong downtrend in the past few months. It has formed a descending channel and remained below the 50-period moving average.

Gemini stock has remained below the Supertrend indicator and has constantly formed a series of lower lows and lower highs. Therefore, the most likely outlook is that it continues to fall as bears target the support at $5. This outlook will become invalid if it rebounds above the upper channel boundary.