Galaxy Digital Unable to Avoid Crypto Market Downturn Faces Rating Downgrade

crypthub

about 3 hours ago

Crypto Market Outlook

Bitcoin faces a tougher liquidity environment as inflation stays hotter and Fed rate cuts are delayed. Core PCE rose to 0.4% MoM, pushing expectations for cuts past June. Digital‑asset fund outflows reached $3.7 bn and ETP volumes halved, signaling weaker demand. Technical charts show Bitcoin breaking below key moving averages, hinting at further downside.

Impact on Galaxy Digital

A prolonged Bitcoin bear market turns Galaxy’s investment income into losses, raising earnings volatility. Q4 trading volume fell ~40% QoQ, slashing Global Markets profit from $295 m to $30 m. AUM dropped to $6.4 bn with ETF, Alternatives and stake assets each down ~25‑27%, tightening fee growth. Advisory work also suffers as capital‑market activity wanes.

Valuation & Technicals

Galaxy trades at a P/B of about 2.1—higher than crisis lows but well below the 3+ peaks of recent years. The AI data‑center business adds recurring cash flow, tempering downside risk. However, the stock slipped below the $22 support level, mirroring Bitcoin’s bearish break and limiting short‑term upside.

Conclusion

The analyst downgrades GLXY to Hold, noting the data‑center buffer but emphasizing near‑term exposure to crypto weakness. Valuation is fair but not compelling; better risk‑adjusted opportunities exist elsewhere.