Wall Street broker Bernstein says crypto-linked equities are moving closer to a cyclical bottom after a deep selloff, arguing that current valuations may represent a meaningful discount ahead of upcoming earnings. The note, led by analyst Gautam Chhugani and cited by Investing.com, frames the recent weakness as part of a broader reset rather than a collapse in the sector’s long-term growth thesis.
According to Bernstein, a combination of macroeconomic uncertainty, geopolitical stress, and weak sentiment across digital assets has put sustained pressure on valuations. Even so, the broker does not believe the industry’s fundamental long-term drivers have materially changed. In its view, the market is repricing risk in the short term, but not erasing the structural case for crypto infrastructure and related businesses.
Bernstein noted that crypto equities have retraced about 60% from their 2025 peaks. That decline has occurred alongside a broader correction in the crypto market, one that wiped out trillions of dollars in value. Bitcoin’s drop from record highs has also contributed to weaker trading conditions, softer investor sentiment, and lower enthusiasm across the listed companies most exposed to digital-asset activity.
Despite maintaining a constructive long-term stance, the broker reduced its price targets across several major names. It cut Coinbase to $330 from $440, Robinhood to $130 from $160, and Figure to $67 from $72. Importantly, all three stocks remain rated Outperform, signaling that Bernstein still expects them to perform better than the broader market or peer set over time.
Why Bernstein still sees value in crypto-related stocks
The central argument in Bernstein’s note is that price weakness and long-term industry value are not the same thing. While sentiment has deteriorated, the broker continues to point to several structural growth themes that could support the sector over the coming years. Those themes include stablecoins, tokenization, prediction markets, and derivatives, all of which are viewed as important pillars of the next phase of crypto market development.
These themes matter because they are not purely dependent on speculative token prices rising in a straight line. Stablecoins are increasingly relevant to payments and on-chain settlement. Tokenization is tied to the migration of traditional financial assets onto blockchain rails. Prediction markets may broaden crypto-native financial participation, while derivatives remain one of the most important channels for institutional engagement and liquidity formation.
Bernstein also differentiates between company-specific business models. It argues that crypto exposure remains a smaller portion of Robinhood’s overall revenue base, which may make the company somewhat more insulated from direct digital-asset volatility. By contrast, Figure is described as a pure-play tokenization business, making it a more concentrated expression of that theme. Coinbase, meanwhile, remains a broad platform name tied to trading, custody, and expanding on-chain services.
The firm expects weak Q1 2026 earnings across the space, but it believes that weakness may actually mark a floor in sentiment. In other words, disappointing near-term results do not necessarily undermine the longer-term opportunity. Instead, Bernstein sees the possibility that once poor results are absorbed and expectations are reset, the group could recover into the second half of 2026.
This is why the report can look cautious and optimistic at the same time. Lower price targets reflect a harsher near-term valuation environment. The continued Outperform ratings reflect confidence that the secular growth narrative has not been broken. For investors, the message is that the sector may still face pressure in the short run, but discounted pricing could become attractive if the underlying structural themes continue to develop.
Bitcoin continues to slump as geopolitical stress weighs on sentiment
The note arrives during another weak stretch for Bitcoin itself. Over the weekend, the cryptocurrency traded lower after remarks from Donald Trump suggested that the United States was engaged in discussions involving a new leadership structure in Iran and that progress toward a possible agreement was underway. Rather than calming markets, the comments added another layer of uncertainty to an already tense geopolitical backdrop.
Price action reinforced that caution. Bitcoin dipped toward $64,000 over the weekend, a move that strengthened the broader view that the market remains rangebound. For now, the dominant trading structure appears to sit between roughly $65,000 and $70,000, with neither bulls nor bears able to establish a decisive breakout.
Sentiment has been driven in large part by escalating tensions in the Middle East. The conflict between Iran and Israel has intensified, with strikes on Iranian targets and regional spillovers affecting Kuwait and other Gulf states. Reports of missile and drone activity, combined with risks to energy infrastructure, have kept investors highly sensitive to headline developments.
The threat to shipping routes through the Strait of Hormuz has added to the pressure. Because the strait is crucial for global energy flows, any escalation there tends to ripple beyond oil markets and into broader risk assets, including crypto. That dynamic has helped keep Bitcoin from recovering sustained upside momentum, even without a full-scale collapse in price.
U.S. political signals have been mixed as well. Trump has alternated between diplomatic messaging and severe threats toward Iranian energy infrastructure. At the same time, U.S. Secretary of State Marco Rubio has reportedly been referenced in discussions suggesting that regime-change dynamics may be emerging. Separately, Pakistan has been described as attempting to facilitate indirect talks, adding even more complexity to the policy picture.
How derivatives positioning is muting volatility
Beyond geopolitics, the report says derivatives positioning has also played a significant role in keeping Bitcoin’s price action subdued. In particular, institutional investors selling covered call options have shifted gamma exposure to market makers. That matters because market makers typically hedge these positions dynamically, which can mechanically reduce day-to-day volatility.
When market makers are forced to hedge in this kind of setup, they often buy into weakness and sell into strength. The result is a dampening effect on price swings. Instead of allowing momentum to build freely in either direction, the options market creates a counterforce that can keep Bitcoin pinned in a narrower trading range than many retail traders expect.
This helps explain why major headlines have not always produced equally dramatic moves in spot prices. Even when geopolitical risk rises, derivatives-related hedging can absorb some of that shock. The market may still react, but the reaction becomes more controlled, more rangebound, and less prone to runaway trend formation unless positioning changes materially.
Bernstein’s broader takeaway is that Bitcoin remains trapped between several overlapping forces: geopolitical tension, macroeconomic uncertainty, and options-driven volatility suppression. Until one of those forces changes meaningfully, the market may continue to churn rather than trend strongly.
Traders are therefore watching for clearer signals from policy developments and liquidity conditions. The report suggests that institutional positioning continues to offset retail-driven momentum and headline shocks in what remains a tightly managed trading environment through the early spring 2026 cycle period.
For investors looking at both crypto equities and Bitcoin, the picture is mixed but not directionless. Short-term weakness is clear, and earnings may disappoint. Yet if Bernstein is right, this phase may be more about valuation compression and sentiment exhaustion than about the end of the crypto growth story. That distinction is what underpins the broker’s view that the current selloff could become a discounted entry zone rather than a definitive long-term breakdown.