Galaxy Digital Plummets 4.8% Amid Sector Turmoil and Options Frenzy – What’s Fueling the Selloff?

Summary
• Galaxy Digital (GLXY) crashes 4.8% to $27.04, breaking below its 50-day moving average of $22.06
• Sector leader Coinbase Global (COIN) drops 15.9% as crypto-linked capital markets stocks face broad pressure
• Options volume surges to 8.4 million shares, with 2025-08-08 put options dominating the chain
• Analysts highlight mixed earnings forecasts and regulatory scrutiny as potential catalysts
Galaxy Digital’s sharp intraday decline has ignited a firestorm in the capital markets sector, with traders scrambling to decode the selloff. The stock’s 4.8% drop to $27.04—its lowest since early March—coincides with a broader retreat in crypto-related equities. As the sector leader Coinbase Global (COIN) tanks 15.9%, investors are left to dissect whether this is a short-term correction or a sign of deeper structural concerns in the digital asset ecosystem.

Capital Markets Sector Volatility Spills into Galaxy’s Core Operations
The selloff in Galaxy Digital reflects a broader collapse in the capital markets sector, driven by a combination of macroeconomic jitters and regulatory uncertainty. With the 30-day moving average at $23.57 and the stock now trading below its 200-day band (data unavailable), technical indicators suggest a breakdown in momentum. The recent 3,952.9% revenue guidance spike to $2.18 billion has failed to reassure investors, as earnings estimates for Q2 (14 cents/share) remain volatile. Analysts point to the SEC’s ongoing scrutiny of digital asset custody and the sector’s exposure to interest rate hikes as key overhangs.

Capital Markets Sector in Freefall: Coinbase’s 15.9% Drop Signals Broader Pain
The Capital Markets sector is experiencing its most severe selloff since Q4 2023, with Galaxy Digital’s 4.8% decline dwarfed by Coinbase Global’s (COIN) 15.9% intraday plunge. While Galaxy operates across digital asset trading, mining, and infrastructure, Coinbase’s exchange-centric model is more directly exposed to crypto price swings and regulatory tailwinds. However, both stocks share vulnerabilities in the sector’s high-beta profile and dependence on risk-on sentiment. The sector’s average P/E ratio of -8.64 (GLXY) and 49.47 (COIN) underscores the market’s bearish recalibration.

Bear Call Spreads and Put Plays: Navigating the Options Frenzy
• MACD: 2.27 (bullish divergence), RSI: 69.27 (overbought), Bollinger Bands: 33.94 (upper), 25.28 (middle), 16.63 (lower)
• Key Levels: 26.00 (support), 27.89 (resistance), 25.5 (critical put-call threshold)
• Sector Correlation: -0.75 with Nasdaq 100 (high negative beta)
• Options Implied Volatility: 105.65%–123.21% (historically elevated)
• Put/Call Ratio: 2.8:1 (extreme bearish bias)

Top Options Plays:
1. GLXY20250808P26
• Strike Price: $26 (Put), Expiry: 2025-08-08
• IV: 118.50% (high volatility), Delta: -0.378 (moderate sensitivity), Theta: -0.049 (time decay), Gamma: 0.080 (price sensitivity), Turnover: 29,205
• Payoff Estimate: 5% downside to $25.69 triggers $1.31 profit (K - ST = $0.31). High gamma and IV suggest strong bearish leverage for short-term moves.
• Why This Pick: The put’s high IV and moderate delta balance risk and reward, ideal for a 7-day horizon where a break below $26.00 could accelerate.
2. GLXY20250808P26.5
• Strike Price: $26.5 (Put), Expiry: 2025-08-08
• IV: 114.42%, Delta: -0.4196, Theta: -0.041, Gamma: 0.085, Turnover: 13,045
• Payoff Estimate: 5% downside to $25.69 triggers $0.81 profit. Gamma of 0.085 ensures rapid payoff acceleration if the stock gaps down.
• Why This Pick: This contract offers a tighter strike closer to the current price, offering better breakeven odds if the selloff continues. High liquidity (13k turnover) ensures execution reliability.
Action Plan: Aggressive bearish traders should consider a bear call spread using GLXY20250808P26 and GLXY20250808C27.5 to capitalize on the sector’s collapse while capping downside risk. Watch for a breakdown below $25.50, which could trigger a 30%+ move in put options.

Backtest Galaxy Digital Stock Performance
The GLXY ETF has historically shown strong resilience following a -5% intraday plunge. The 3-day win rate is 52.94%, the 10-day win rate is 76.47%, and the 30-day win rate is 88.24%, indicating that the ETF tends to rebound over the short term. The maximum return during the backtest period was 50.79%, which occurred on day 45, suggesting that while there is some volatility, GLXY can experience significant gains in the aftermath of a sharp decline.

Sector-Wide Collapse: Galaxy’s 4.8% Drop Signals a Pivotal Threshold
The 4.8% decline in Galaxy Digital is not just a stock move—it’s a sector-wide warning shot. With the capital markets segment led by Coinbase Global’s 15.9% plunge, the selloff reflects deepening concerns over regulatory risks and macroeconomic headwinds. Traders should monitor the 200-day moving average (unknown) and the $25.50 critical support level. If GLXY closes below $25.50, the 2025-08-08 put options could see exponential gains. For now, the focus remains on short-term volatility and the sector’s ability to rebound from current levels. Investors are advised to lock in profits or hedge with the recommended bear call spreads as uncertainty persists.