Galaxy Digital Plummets 6.5% Amid Regulatory Scrutiny and AI Pivot Uncertainty

Summary
• Galaxy Digital (GLXY) trades at $25.78, down 6.49% from $27.57
• Intraday range: $25.515 (low) to $27.11 (high)
• Turnover surges to 4.31M shares, 2.29% of float
• Sector leader Equinix (EQIX) rallies 2.21% as data center demand intensifies

Galaxy Digital’s sharp selloff has ignited speculation about its AI-driven data center ambitions and regulatory hurdles. With the stock trading near its 52-week low of $17.40, investors are scrutinizing the firm’s $1.15B notes offering and mixed analyst ratings. The broader data center sector remains polarized, as companies like Equinix gain traction while GLXY faces turbulence.

Regulatory Uncertainty and AI Execution Risks Spark Turbulence
Galaxy Digital’s 6.49% decline stems from a confluence of factors: its $1.15B exchangeable notes offering, which raised concerns about debt burden, and ongoing regulatory uncertainty in the crypto sector. Recent news highlighted CEO Mike Novogratz’s Solana bullishness, yet the stock’s collapse suggests investor skepticism about its AI pivot. The Helios data center project, while ambitious, faces execution risks as the company balances crypto and AI infrastructure. Analysts at Weiss Ratings reiterated a 'Hold (C-)' rating, underscoring doubts about profitability in a competitive market.

Data Center Sector Mixed as Galaxy Digital Struggles
The data center sector remains fragmented, with Equinix (EQIX) surging 2.21% on strong cloud demand and AI infrastructure growth. Galaxy Digital’s struggles contrast with peers like CyrusOne and Digital Realty, which benefit from stable enterprise contracts. GLXY’s focus on AI-driven projects like Helios introduces execution risk, while competitors leverage established colocation models. The sector’s $2.5B 2030 market forecast highlights long-term potential, but GLXY’s regulatory and operational challenges create near-term headwinds.

High-Leverage Puts for Short-Term Volatility
• RSI: 51.27 (neutral)
• MACD: -1.97 (bearish), Signal: -2.41, Histogram: 0.43 (downtrend)
• Bollinger Bands: Upper $32.34, Middle $27.05, Lower $21.77 (oversold near $25.70)
• 30D Support: $25.48–$25.82

GLXY’s technicals suggest a short-term bearish bias, with key support at $25.48. The 2025-12-12 options expiry offers two high-conviction plays:

• GLXY20251212P25 (Put):
- Strike: $25, Expiry: 12/12
- IV: 83.78% (elevated), Delta: -0.36 (moderate sensitivity), Theta: -0.023 (slow decay), Gamma: 0.117 (responsive to price swings), Turnover: $230K
- Payoff (5% downside to $24.42): $0.58/share. This put offers leverage (30.47%) and liquidity, ideal for capitalizing on a breakdown below $25.48.

• GLXY20251212P26 (Put):
- Strike: $26, Expiry: 12/12
- IV: 93.51% (high), Delta: -0.48 (strong directional bias), Theta: -0.018 (low decay), Gamma: 0.111 (high sensitivity), Turnover: $22.5K
- Payoff (5% downside to $24.42): $1.58/share. This contract’s high IV and delta make it a top pick for aggressive short-term bearish bets.

Action: Aggressive bears should prioritize GLXY20251212P25 for liquidity and GLXY20251212P26 for directional exposure. Watch for a close below $25.48 to validate the bear case.

Backtest Galaxy Digital Stock Performance
Below is the interactive event-backtest panel. It summarises the 14 occurrences where Galaxy Digital (GLXY) closed down ≥ 6 % in a single session since the start of 2022 and shows the post-event return profile against a buy-and-hold benchmark.Key take-aways1. Signal frequency: 14 events over the sample period (≈ one every 8 months).2. Short-term performance: 1–5-day excess returns are generally small and statistically insignificant.3. Medium-term drift: By day 30 the cumulative event portfolio still lags the benchmark by ~4 pp; significance tests remain weak.4. Practical implication: Simply “buying the dip” after a 6 % sell-off has not delivered a reliable edge on GLXY since 2022. Consider combining with additional filters (e.g., oversold RSI, crypto-market breadth) before deploying capital.Method note: True intraday data were unavailable, so we approximated “intraday plunge” with the daily close-to-close drawdown; this tends to under-identify sharp intraday reversals and therefore may bias results toward conservatism.

Galaxy Digital at Crossroads: Watch $25.48 Support and AI Bet
Galaxy Digital’s 6.49% drop reflects investor jitters over its AI pivot and regulatory risks. While the sector leader Equinix (EQIX) gains 2.21%, GLXY’s execution risks and debt load remain critical hurdles. Key levels to monitor: $25.48 (30D support) and $27.05 (Bollinger Middle Band). A breakdown below $25.48 could trigger further selling, while a rebound above $27.11 might attract AI bulls. Act now: Short-term bears should target GLXY20251212P25/26 options, while long-term investors should wait for a clearer regulatory and AI infrastructure roadmap.