Galaxy Digital Plummets 13% Despite Record Earnings: What’s Fueling the Selloff?

Summary
• Galaxy Digital (GLXY) plunges 12.9% intraday to $37.32, erasing $5.5B in market cap
• Q3 net income surges 1,546% to $505M, data center financing hits $1.4B
• Helios campus expansion on track, GalaxyOne platform launched
Galaxy Digital’s stock is in freefall despite a blockbuster Q3 earnings report. The crypto and data center juggernaut reported record $505M net income, secured $1.4B in project financing for its Helios data center, and launched a retail investing platform. Yet, the stock has cratered from a $41.25 intraday high to $37.20, raising urgent questions about market sentiment and technical triggers.

Earnings Optimism Clashes with Market Skepticism
Galaxy’s Q3 results were a masterclass in execution: $505M net income, $1.4B in Helios funding, and a $9B bitcoin trade. However, the market’s reaction defies logic. The selloff coincided with a $460M institutional investment announcement, which should have been bullish. Instead, traders are pricing in risks: crypto market volatility, regulatory uncertainty in data centers, and skepticism about GalaxyOne’s scalability. The stock’s 12.9% drop suggests investors are hedging against short-term crypto price swings and questioning the sustainability of non-crypto revenue streams.

Diversified Financials Mixed as Galaxy Diverges
The Diversified Financial Services sector is split, with leaders like American Express (AXP) down 0.2% and laggards like NerdWallet (NRDS) down 5.6%. Galaxy’s 13% drop is an outlier, reflecting its crypto-centric exposure. While peers like Paymentus (PAY) outperformed with 18.6% gains, Galaxy’s selloff underscores crypto’s unique volatility. The sector’s 0.9% revenue beat vs. Galaxy’s earnings optimism highlights a disconnect between traditional finance and crypto-linked assets.

Options Playbook: Hedging the Crypto Volatility
• Bollinger Bands: Upper $45.11, Middle $37.99, Lower $30.87 (current price near lower band)
• MACD: 2.77 (bullish), Signal 2.91, Histogram -0.14 (bearish divergence)
• RSI: 66.06 (neutral)
• 30D MA: $35.76 (price above), 100D MA: $27.30
Galaxy’s technicals show a short-term bullish trend but bearish divergence in MACD. Key support at $32.79 and resistance at $45.11. The 12.9% drop has created a buying opportunity for long-term holders, but near-term volatility remains high. The $37.32 price is 15% below the 52W high of $45.92, suggesting a potential bounce.
Top Options:
• GLXY20251031P36 (Put): Strike $36, Expiry 10/31, IV 97.03%, Leverage 20.12%, Delta -0.396, Theta -0.0489, Gamma 0.0648, Turnover $28,947
- IV: High volatility (97.03%) signals market uncertainty
- Leverage: 20.12% amplifies downside potential
- Delta: -0.396 indicates moderate sensitivity to price drops
- Theta: -0.0489 (high time decay) favors quick moves
- Gamma: 0.0648 (moderate sensitivity to price swings)
- Payoff: If price drops 5% to $35.45, payoff = $0.45 per share
- Why: This put offers high leverage and gamma for a bearish bet with limited time decay.
• GLXY20251031C36 (Call): Strike $36, Expiry 10/31, IV 147.26%, Leverage 9.03%, Delta 0.595, Theta -0.2463, Gamma 0.0429, Turnover $28,700
- IV: 147.26% (extreme volatility) reflects aggressive bullish sentiment
- Leverage: 9.03% for moderate upside
- Delta: 0.595 (high sensitivity to price gains)
- Theta: -0.2463 (rapid time decay) favors immediate rallies
- Gamma: 0.0429 (low sensitivity to price swings)
- Payoff: If price rises 5% to $39.19, payoff = $3.19 per share
- Why: This call thrives on a sharp rebound, leveraging high IV and delta for quick gains.
Action: Aggressive bulls may consider GLXY20251031C36 into a bounce above $37.99. Cautious bears should target GLXY20251031P36 if support at $32.79 breaks.

Backtest Galaxy Digital Stock Performance
Below is an interactive back-test dashboard for the “13 % Intraday-Plunge Rebound” strategy on Galaxy Digital (GLXY) from 2022-01-03 to 2025-10-22. (The strategy buys GLXY on the first session after any day when that day’s low is at least 13 % below its high, and sells on the first event of: +25 % gain, –10 % stop-loss, or 20 trading-day time-stop.)Key results (detailed in the module):• Total return: -1.85 % • Annualised return: 3.13 % • Max draw-down: 19.87 % • Sharpe ratio: 0.08 • Avg win trade: +9.72 % • Avg loss trade: -10.54 %Interpretation1. Edge appears weak: The slightly negative total P&L and very low Sharpe (0.08) indicate the rule has not delivered a robust edge over the period tested. 2. High volatility: A near-20 % maximum draw-down suggests the stop-loss was frequently triggered; GLXY’s inherent crypto-linked volatility may overwhelm fixed 10 % stops. 3. Pay-off asymmetry: Wins and losses are comparable in magnitude, but the win rate is below 50 %, so the overall expectancy is negative. 4. Parameter sensitivity: Tighter stop-losses or wider take-profits might further hurt win rate, while looser stops risk larger draw-downs. A dynamic exit (e.g., trailing stop) or filtering by broader-market regime could improve performance. 5. Limited sample size: Extreme intraday plunges (≥13 %) are rare (see event list in the tool); conclusions are statistically fragile. Consider lowering the plunge threshold (e.g., 8 – 10 %) or combining with volume/volatility filters to boost sample size.Next steps• Explore different plunge thresholds (–8 %, –10 %) and exit rules (e.g., 30-day mean-reversion, ATR-based stops). • Test on a basket of crypto-linked equities to check robustness across names. • Incorporate market regime filters (e.g., BTC trend above/below 200-day MA) to avoid down-trending environments.Refer to the dashboard below for full drill-down of each trade, equity curve and distribution stats.

Galaxy at Crossroads: Buy the Dip or Sell the News?
Galaxy’s 13% selloff is a classic case of earnings optimism clashing with market skepticism. While the company’s fundamentals are robust—$505M net income, $1.4B in data center funding, and a $9B bitcoin trade—the stock’s technicals and options activity suggest short-term volatility. The $37.32 price is near key support at $32.79, offering a potential entry point for long-term investors. However, the sector leader American Express (AXP) is down 0.2%, signaling broader market caution. Watch for a break below $32.79 to confirm bearish momentum or a rebound above $37.99 to validate the bull case. For now, the data center and crypto convergence story remains intact, but patience is key in this high-volatility environment.