Galaxy Digital's stock has experienced a sharp decline, now trading at its lowest level since April of last year. The shares recently fell to $14.68, marking a drop of more than 68% from the 2025 peak of $36.11. This sell-off has erased billions in market value, and the near-term outlook remains clouded by falling cryptocurrency prices and growing concerns about the artificial intelligence sector.
Technical Indicators Signal Further Weakness
The daily chart reveals a persistent downtrend, with the stock breaking below the key support level of $16.67, which had previously held in February and April. A death cross has formed, where the 50-day moving average crossed below the 200-day moving average, a classic bearish signal. Additionally, the stock remains below the Supertrend indicator, and the Average Directional Index (ADX) has climbed to 28.2, its highest level since May 18. A rising ADX indicates that the downward momentum is strengthening, suggesting that the stock could test the next major support at $10.
Dual Headwinds: Crypto Retreat and AI Jitters
Galaxy Digital faces two significant challenges. First, the ongoing crypto market downturn has pressured its trading and investment activities. The most recent quarterly results showed revenue fell 15% to $8.71 billion, and the company reported a net loss exceeding $85 million. As long as Bitcoin and other digital assets remain under pressure, these financial strains are likely to persist.
Second, the company is heavily exposed to the AI infrastructure boom, having invested millions in data center projects. Its largest client, CoreWeave, a neocloud provider, is facing substantial risks despite a $104 billion backlog. CoreWeave's bond yields have surged to 15%, reflecting investor concerns about its financial stability. These AI-related worries have weighed on Galaxy Digital's stock, as the market questions the sustainability of such capital-intensive ventures.
Upcoming Earnings: A Potential Catalyst
The next major event for Galaxy Digital is its third-quarter earnings report, which will provide updated insights into its business performance. Analysts currently expect revenue of $12.1 billion for the quarter, a 70% decline year-over-year. For the full year, consensus estimates point to revenue of $52.5 billion, down 37% from the previous year. These projections underscore the severity of the current downturn.
Despite the bearish technicals, the options market hints at a possible rebound post-earnings. The put/call ratio stands at 0.26, with most call options concentrated at the $16 strike price, about 10% above the current level. This suggests some traders anticipate a bounce.
Several analysts remain optimistic about the stock's recovery. Maxim Group has a price target of $36, while Piper Sandler sees the stock reaching $25. Citigroup and Morgan Stanley have targets of $28 and $43, respectively. However, these forecasts are contingent on a stabilization in crypto markets and a resolution of AI-related uncertainties.
In summary, Galaxy Digital's stock is under significant pressure from both the crypto winter and AI sector jitters. The upcoming earnings report could provide a short-term catalyst, but the broader trend remains bearish unless market conditions improve.
This article is for informational purposes only and does not constitute financial advice.
