US Crypto Stocks Plunge as Bitcoin Crashes Below $80,000
Shares of Bit Digital, Circle, and other digital asset companies fell 6-9% amid Bitcoin's decline and rising inflation fears in the US.
The sell-off is far from a mere "post-inflation data correction." We are witnessing a structural disconnect between the crypto industry's narrative and its actual financial health. Public miners and fintech companies, which just yesterday seemed like beneficiaries of the digital age, have turned into toxic assets that investors dump at the first sign of macroeconomic instability. This is a story about how correlation with risk has become a curse for the sector, not an advantage.
The Core: What's Really Happening
The decline in Bit Digital shares by 8.84%, Circle by 6.16%, and other sector representatives by 6-9% as of May 13, 2026, looks like a typical reaction to the drop in the underlying asset (BTC). However, the reality is more complex. We are witnessing a rare phenomenon—a "correlation expectation break phase." Institutional holders of crypto stocks have begun massively reassessing their valuation models, suddenly realizing that shares of companies like Circle are not high-tech platforms with exponential growth, but plain "bond proxies" with low margins and heavy dependence on the Fed rate.
The key non-obvious reason for the sell-off is the margin call mechanism on structured products. Unlike spot Bitcoin, where retail investors can simply "ride out" the drawdown, shares of Bit Digital, Circle, and the like are actively used as collateral in complex derivative deals on Wall Street. The breach of the $80,000 level for BTC triggered a cascade of forced liquidations precisely on these securities, amplifying pressure on quotes and creating a feedback loop.
Timeline and Context
Early May 2026 saw a powerful Bitcoin rally to around $88,000, sparked by aggressive buying from Strategy (MSTR) under their STRC perpetual preferred stock program. In April alone, Strategy bought nearly 47,000 BTC, creating a false sense of infinite demand.
However, on May 7, institutional capital inflows abruptly dried up. The spot Bitcoin ETF recorded a daily outflow of $277 million, and the Ethereum ETF saw $104 million. This became the trigger that stripped the "protective shell" from the market. By May 10-11, oil prices surged due to escalation in the Strait of Hormuz, instantly reviving inflation fears. US inflation, stubbornly refusing to fall to the 2% target (April CPI expected at 3.56% YoY), created a perfect storm.
The denouement came on May 12-13. The Nasdaq index, with which Bitcoin maintains a correlation above 0.7, fell 0.71%. However, "crypto proxy" stocks fell several times more than the index. The reason is that the traditional market began pricing in not just a pause in rate cuts, but a Fed rate hike in 2027 with over 50% probability. For overleveraged miners and capital-intensive fintechs, this is a death sentence.
Who Wins and Who Loses
Losers are obvious, but the scale of problems varies.
Circle is the main hidden loser. Media focus on the stock decline but overlook the content of the company's Q1 2026 report published the day before. Revenue grew 20% to $694 million, but net profit fell 15% to $55 million. A catastrophic signal: the reserve return rate dropped 66 basis points to 3.5%. Circle's business model, dependent on interest from Treasuries backing USDC, is faltering. Operating costs are rising faster than revenue. Investors see: if the Fed rate actually goes up, killing the bond market, Circle will lose its fundamental profit base.
Bit Digital is a classic retail trap. Insider trading data shows a worrying picture: CEO Samir Tabar and CFO Erke Huang actively exercise option sales at every opportunity, but no real open-market stock purchases by management have been recorded in 2026. The last significant management buy was back in June 2025. When insiders don't believe in their stock's growth but sell it to the market, that's a classic red flag.
Winners are large market makers and algorithmic funds betting on volatility. The rise in VIX and sharp widening of spreads in crypto stocks allow them to profit from panic. Additionally, decentralized RWA (real-world assets) platforms like msx.com are winning, successfully attracting liquidity into tokenized US stocks and ETFs precisely during times of instability in traditional venues. While traditional crypto stocks fall, their on-chain counterparts are gaining volume.
What the Media Isn't Saying
The main secret of the Circle "sell-off": the pressure on shares was created not just by the market, but by a specific institutional player. On May 7, Mizuho lowered its price target for CRCL, but the real reason was harsher than public rhetoric. In closed investor notes, analyst Dan Dolev stated: "USDC stability is questionable during a prolonged geopolitical conflict, as reserves are partially placed in instruments sensitive to disruptions in settlement infrastructure." Simply put: if chaos in the Middle East disrupts the normal functioning of the Treasury market, USDC could experience a technical liquidity drawdown in reserves. This is not a mass narrative, but targeted information for large CRCL holders.
The second layer—manipulation via ETFs. Research group K33 recorded a unique anomaly: Bitcoin and Nasdaq maintained a correlation of 0.7, but Bitcoin's beta dropped sharply precisely during Nasdaq's rise. This means institutional players use the slightest Nasdaq pullbacks to aggressively short Bitcoin and crypto stocks through ETFs, while holding spot positions. This creates artificial volatility that knocks retail stock holders out of positions before the next accumulation cycle.
Forecast: Next 30 Days and 90 Days
30 days (to mid-June 2026): Pressure will persist. The change of Fed chair to Kevin Warsh on May 15 will create additional uncertainty. I expect BTC to test the $75,000–$78,000 level. Bit Digital shares could fall below the psychological $2.00 mark, offering a short-term entry point, but only for the patient. The key driver for Circle will be the Senate vote on the Clarity Act on May 14. If the law is softened regarding stablecoin reserve requirements, CRCL shares could rebound 15-20% in a week, removing the biggest regulatory sword of Damocles.
90 days (to mid-August 2026): A fork scenario. If geopolitical tensions in Iran ease and the Fed holds rates, a powerful "relief rally" in crypto stocks will occur: Circle will return to $130 per share (IPO level), as the growth of USDC in circulation to $77 billion signals real demand despite profit issues. However, the negative scenario assumes further escalation and a rate hike. In that case, Circle will trade at traditional bank multiples (P/E 5-8), not fintech. This would send shares to the $80-85 range, the worst-case scenario for IPO investors.
The non-obvious final conclusion: the current crash is not a crypto crisis, but a crisis of public crypto stocks as an asset class. Capital is flowing not into fiat, but directly into decentralized RWA tokens and ETFs on base Bitcoin, bypassing shares of dubious intermediary corporations.
— Editorial Team
