Crypto Stocks Trade as Bitcoin Proxies as Correlation Strengthens: Kaiko

Crypto-linked equities are increasingly trading like a proxy for Bitcoin (BTC) rather than tracking the broader U.S. stock market, according to a new analysis from Kaiko Research—a shift that matters as slowing volumes and intensifying competition begin to separate structurally resilient firms from the rest.

In a recent report, Kaiko Research analyst Thomas Probst said major publicly listed crypto-facing names—including Coinbase ($COIN), Circle Internet Group ($CRCL), Gemini ($GEMI), and Bullish ($BLSH)—have shown price behavior driven more by the direction of the crypto market and trading conditions than by company-specific fundamentals. As liquidity thins and fee pressure rises, Probst argues the industry’s survival metrics are converging on three factors: 'scale', 'liquidity', and 'diversification' of revenue.

The decoupling from the wider equity rally has been stark in 2026. Since the start of the year, Gemini has fallen close to 60%, Bullish is down roughly 40%, and Coinbase has dropped about 36%, the report noted. Over the same period, the S&P 500 ($SPX) rose around 12.8%, while Bitcoin fell 27.31%—a directional match that reinforces the market’s view of these stocks as indirect exposure to crypto risk rather than conventional financial equities.

Correlation data backs up that narrative. Kaiko found Coinbase’s 30-day rolling correlation with Bitcoin remained positive throughout the observed period and climbed to 0.76 after June. By contrast, Coinbase’s rolling correlation with the S&P 500 fell to roughly 0.33 over the same stretch. The takeaway, Probst suggested, is not that macro factors no longer matter, but that the marginal driver of price action is increasingly internal to crypto—spot prices, volatility, and trading activity.

This dynamic reflects how exchange businesses still monetize: revenue remains tightly linked to transaction activity. When prices weaken and volumes fade, the market quickly prices in slower growth and margin pressure. When crypto rebounds, expectations of platform activity and fee capture recover just as quickly. In that sense, stocks like Coinbase are being valued closer to a 'crypto beta' instrument than a traditional stock-market beta.

Coinbase provides a clear case study. The company said in its second-quarter results released on July 30 that it delivered its 14th consecutive quarter of positive adjusted EBITDA. It also announced a 14% workforce reduction and lowered its annual adjusted expense guidance, underscoring a renewed focus on cost discipline even as the market downcycle persists.

Yet the report noted that profitability resilience has not insulated the stock from Bitcoin-led moves. Investors continue to treat Coinbase as a direct beneficiary—or casualty—of the trading environment, rather than re-rating it as a conventional cash-flow story. Kaiko argued that even if Coinbase retains a high correlation to Bitcoin from a pricing perspective, demonstrating operational 'resilience' through the cycle is likely to be the core determinant of long-term value.

Across the exchange sector, the importance of scale is becoming harder to ignore. Kaiko pointed to closure announcements from several platforms, including BitMEX, Bit.com, and BitMart, as signals that smaller operators are struggling under the combined weight of declining volumes, fee competition, high fixed operating costs, and tightening compliance expectations. In markets with strong network effects, liquidity tends to concentrate at the top—drawing in market makers and institutions that further reinforce the dominance of large venues.

Volumes have been trending lower even for the leaders. Coinbase’s daily trading volume has declined through the year to around $1 billion, Kaiko said, compressing transaction-linked revenue and heightening the strategic premium on infrastructure and distribution. Among tracked exchanges, the top six venues now account for more than 60% of total volume, while Binance alone represents roughly 34%—a concentration profile that typically accelerates during downcycles.

Coinbase’s internal mix also shows both vulnerability and adaptation. Trading activity is still centered on the BTC-USD market, but the firm has meaningful contributions from pairs linked to Ethereum (ETH), XRP (XRP), Solana (SOL), Zcash (ZEC), and Tether (USDT), which helps reduce reliance on a single asset’s activity. More importantly, Coinbase has been pushing beyond spot trading into derivatives, prediction markets, staking, custody, institutional services, and stablecoin-related business lines. Kaiko highlighted that 88% of net revenue in 2026 Q2 came from activities other than Bitcoin spot trading—an emblem of the company’s push toward a more diversified earnings base.

Circle, meanwhile, illustrates a different sensitivity: competitive pressure inside the stablecoin market. The company’s growth has been anchored by USD Coin (USDC), but Kaiko flagged the emergence of new challengers as a developing overhang. On June 30, a newly announced product called 'Open USD' entered the conversation as a bid for a regulatory-friendly dollar stablecoin niche—one that overlaps directly with Circle’s core positioning.

USDC still holds a strong footprint, with an approximate market capitalization of $70 billion as of June 2026, supported by a reputation for transparency, regulatory alignment, and institutional usability. In stablecoins, however, adoption is less about issuance mechanics than distribution: exchange integrations, market-maker availability, liquidity depth, and real-world payment utility create powerful network effects. That makes swift displacement difficult—but not impossible if an entrant converts institutional backing into meaningful circulation and trading share.

For now, Kaiko suggested the equity market may be pricing the 'potential competitive risk' ahead of clear evidence in market share data. If Open USD gains traction, it could pressure USDC’s growth narrative and, by extension, Circle’s valuation framework. Conversely, if network effects and incumbency hold, the competitive threat may fade without materially altering USDC’s standing.

Kaiko’s broader conclusion is that crypto-linked equities remain highly exposed to the direction of Bitcoin and overall trading sentiment in 2026. But the next phase of differentiation is increasingly structural: in a lower-volume, higher-competition environment, firms with deeper liquidity, stronger infrastructure, and more diversified revenue streams are better positioned to withstand drawdowns—and capture upside when activity returns.

In that context, Kaiko argued that the market’s eventual winners among crypto-linked stocks may be determined less by pure exposure to the asset class and more by whether companies can convert crypto sensitivity into a durable business model. Near term, Bitcoin will likely continue to steer price action. Over time, the decisive variables are sharpening around 'scale', 'liquidity', and 'diversification'.