Coinbase Stock Drops As Bitcoin Falls, FTX Concerns Grow

Brian Armstrong, CEO and co-founder, Coinbase, speaks during the Milken Institute Global Conference on May 2, 2022. in Beverly Hills, Calif.

Patrick T Fallon | AFP | Getty Images

Coinbase Shares fell more than 8% on Monday, extending a slide that has pushed the cryptocurrency exchange to its lowest level since it entered the market in April 2021. The drop comes in the form of bitcoin The recession continues and investors fear contagion from FTX’s stunning crash earlier this month.

Nineteen months after going public with a market cap of more than $85 billion, Coinbase has fallen below $10 billion and has lost more than a quarter of its value in the past four trading sessions.

Questions have been swirling about the health of FTX’s rival exchanges, leading to an industry-wide sell-off that has some companies temporarily suspending trading, while others are preparing potential bankruptcy filings. Mizuho analysts wrote in a note on Friday that daily volumes in the industry are on track to be 30% to 40% below their average for the year.

Coinbase CEO Brian Armstrong said in a CNBC op-ed Nov. 11 that his company has “no physical exposure to FTX,” but that he “sympathizes with everyone involved.” Coinbase shares are down more than 83% since the start of the year.

“It’s exhausting any time there’s a potential to lose customers in our industry, and a lot of people lose a lot of money as a result of FTX’s struggles,” Armstrong said.

Bank of America downgraded Coinbase on Friday, citing a “contagion risk” for the cryptocurrency exchange, even if it is not “another FTX.”

“That doesn’t make them immune from the broader ramifications of the crypto ecosystem,” Bank of America’s Jason Kupferberg writes.

Prior to the FTX drop, the market was in the midst of a crypto winter that sent bitcoin prices skyrocketing raised And forced a number of companies into bankruptcy. Earlier this month, Coinbase reported a revenue drop of more than 50% in the third quarter from a year earlier, and a loss of $545 million. In June, the cryptocurrency exchange cut 18% of its workforce.

The subsequent sell-off has been even more extreme, with bitcoin dropping more than 3% on Monday to its lowest level in more than two years, and ethereum down more than 6%. Solana, the cryptocurrency promoted and backed by FTX founder Sam Bankman-Fried, has lost more than two-thirds of its value in two weeks.

Within days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals, and rival exchange Binance tore up its non-binding agreement to buy the company. FTX filed for Chapter 11 bankruptcy protection November 11.

Bankman-Fried said the company’s assets were “good” two days before he resented the bailout. He has since said in tweets that he is trying to recover deposits for the company’s customers.

Watch: The full CNBC interview with Coinbase CEO Brian Armstrong

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *