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Insider Trading at Crypto-Related Companies Shows Mixed Signals

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Cryptocurrencies have had a rough first half of 2022, with Bitcoin (BTC) falling over 57% year-to-date. As crypto has become more mainstream, an increasing number of public companies have become tied to the world of cryptocurrency and digital assets. How have insiders at the top crypto-related companies been trading so far this year?

MicroStrategy Inc. (MSTR) holds BTC directly, and has been hit hard by the recent slump in crypto prices. Insiders have responded by flipping from selling to buying approximately $1.5 million so far this year, including Director Rickertsen, whose trade was described in an article published June 15.

Coinbase Global Inc. (COIN) is a financial technology company that operates a cryptocurrency exchange platform. Recently, Director Frederick Ernest Ehrsam III purchased $76.8 million as the stock stumbled, one of the largest insider purchases overall so far this year. The buy was made through Paradigm One LP. As evidenced by Ehrsam's large acquisition, some investors think that the current crypto slump won't affect COIN's long-term potential.

While insiders at MSTR and COIN have stepped in amid the slump, insiders at other companies in the sector have had less of an appetite to buy. Shares of bitcoin miner Riot Blockchain Inc. (RIOT) have slumped, but, as shown on the graph below, insiders have yet to jump in to purchase shares. At other companies that either accept crypto as payment—like Tesla Inc (TSLA)—or provide key components in crypto mining—like NVIDIA Corp (NVDA) or Advanced Micro Devices (AMD)—share prices have slid but insiders have also not yet stepped in to purchase. Shares of these companies remain expensive despite the declines, which could explain why insiders have yet to step in to purchase. Given the differing behavior by insiders at these companies, there is no clear signal that insiders are sending regarding the direction of stocks tied to crypto. Investors should therefore keep a close eye on insider behavior at these companies, should crypto either rebound or continue to slide.

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The Washington Service Research Team

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