Galaxy Digital Takes a $300M Hit Amidst Crypto Market Turmoil

Cryptocurrency financial services firm Galaxy Digital (GLXY) anticipates a quarter-to-date loss of approximately $300 million as of Wednesday, primarily attributed to recent market conditions. The company emphasizes that its treasury does not leverage algorithmic stablecoins and maintains a liquidity position of $1.6 billion, half in cash and half in non-algorithmic stablecoins. Galaxy's net comprehensive income loss is expected to reach $300 million, reducing partners' capital by 12% since March 31, 2022.

Galaxy Digital Incurs Significant Losses Amid Market Turmoil

New York, May 13, 2022 - Leading cryptocurrency financial services firm, Galaxy Digital Holdings Ltd. (GLXY), has disclosed an anticipated quarter-to-date loss of approximately $300 million. This disclosure comes in the wake of recent market turbulence and a sharp downturn in crypto asset prices.

"In light of recent market conditions," Galaxy Digital issued a statement on Friday, detailing the expected loss. The firm emphasized that its treasury does not engage in the use of algorithmic stablecoins, unlike some industry participants.

The collapse of the algorithmic stablecoins terraUSD (UST) and LUNA has been a major contributing factor to the market turmoil. Galaxy Digital clarified that its current liquidity position stands at approximately $1.6 billion, with a 50/50 distribution between cash and net digital assets. Notably, the majority of these net digital assets are non-algorithmic stablecoins.

Consequently, Galaxy Digital has projected a net comprehensive income loss of $300 million, bringing partners' capital to $2.2 billion. This represents a 12% decline compared to March 31, 2022.

Earlier this week, Galaxy Digital reported its first quarter earnings, revealing a loss of $111.7 million, a stark contrast to the $858.2 million gain reported in the corresponding quarter a year ago.

Toronto-listed GLXY shares experienced a significant downturn on Thursday, closing at $7.72, a 43% decline compared to their value prior to the release of the first quarter earnings report.

"Investor Concerns About Galaxy Digital's LUNA Exposure Are Overblown, BTIG Says"

Despite these setbacks, BTIG, a financial services firm, has expressed confidence in Galaxy Digital's resilience. BTIG analysts have noted that the firm's exposure to LUNA was relatively limited and that its diverse business model provides buffers against market volatility.

Galaxy Digital remains committed to its mission of providing innovative cryptocurrency services and navigating the evolving market landscape. The firm's strong balance sheet and liquidity position are seen as key advantages in the current environment.

As the cryptocurrency market continues to experience volatility, Galaxy Digital and other industry participants will be closely monitored for their response and ability to adapt to the changing conditions.