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Coinbase Stock Drops As Bitcoin Falls, FTX Concerns Grow

Coinbase Stock Drops As Bitcoin Falls, FTX Concerns Grow

Brian Armstrong, CEO and Co-Founder of Coinbase, speaks at the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California.

Patrick T. Fallon | AFP | Getty Images

Coinbase The stock fell more than 8% on Monday, continuing the slide that sent the cryptocurrency exchange to its lowest level since its debut on the market in April 2021. bitcoin The downturn continues and investors are worried about possible contagion from FTX’s spectacular crash earlier this month.

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

Questions arose about the health of FTX’s rival exchanges, sparking an industry-wide sell-off, with some companies temporarily suspending trading and others filing for possible bankruptcy. Analysts at Mizuho wrote in a Friday note that daily volumes in the industry are 30-40% below the yearly average.

Coinbase CEO Brian Armstrong said in a Nov. 11 op-ed for CNBC that his company does not have “any significant influence on FTX” but that he “sympathizes with everyone involved.” Coinbase shares are down over 83% this year.

“Whenever there is a possibility of losing a customer in our industry, there is stress and many people lose a lot of money as a result of FTX issues,” said Armstrong.

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

“That doesn’t make them immune to broader implications in the crypto ecosystem,” wrote Bank of America’s Jason Kupferberg.

Prior to the fall of FTX, the market was in the midst of a crypto winter that resulted in the price of bitcoin and ethereum collapsed and forced a number of firms to go bankrupt. Earlier this month, Coinbase reported a drop in revenue of more than 50% in the third quarter compared to last year and a loss of $545 million. The cryptocurrency exchange cut 18% of its workforce in June.

The subsequent sell-off was even sharper, with bitcoin falling more than 3% on Monday to its lowest level in more than two years. Ethereum fell over 6% on Monday. Solana, a coin promoted and backed by FTX founder Sam Bankman-Freed, has lost more than two-thirds of its value in two weeks.

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

Bankman-Fried said the company’s assets were “in order” two days before he was in desperate need of a bailout. He has since said on Twitter that he is trying to recover deposits from the company’s customers.

WATCH: Full CNBC interview with Coinbase CEO Brian Armstrong

Written by khirou

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