Crypto Crash Rocks Coinbase as Traditional Investors Flee Bitcoin

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Coinbase Global (COIN) wants to be seen as something other than an exchange primarily offering the ability to buy and sell cryptocurrencies.

Unfortunately for the platform – the largest in the US and the most widely used in the UK – its future seems tied to that of crypto for the time being.

Its stock is one of the collateral victims of the cryptocurrency crash, which has already wiped out more than $1.3 trillion since records were hit in early November.

Coinbase lost 13.38% on Friday to end the session at $191.97. The stock price is now a far cry from its IPO price of $310 last April. On that day, its market cap was $85.6 billion. It has fallen by $35 billion in less than a year.

Since January, Coinbase investors have watched $16 billion in market capitalization evaporate in the cryptocurrency markets rout.

The platform hasn’t had time to catch its breath yet.

“What a week,” the company posted on Twitter on Jan. 21, adding, “Drop an emoji to show us how you’re feeling…”

Robinhood (HOOD) – Get the Class A report from Robinhood Markets, Inc., the popular trading app that was pressured to be allowed to offer as many coins as possible on its platform, also feels pain. The company is very popular with traders.

The stock has fallen 27% year-to-date to $12.98, below its IPO price of $38.

Coinbase is too dependent on Bitcoin, Ethereum

Most transactions on Coinbase involve Bitcoin and Ethereum, which have been in freefall for five weeks. The top two cryptocurrencies by market cap have lost 48.1% and 48.7% respectively since their all-time highs on November 10.

Bitcoin and Ethereum together accounted for 43% of Coinbase’s $1.1 billion in transaction revenue in the third quarter.

The company said its short-term performance will be largely determined by crypto prices.

Founded in 2012 with the aim of making it easier to buy bitcoin, Coinbase has become the most popular cryptocurrency exchange in the United States and its value has skyrocketed alongside bitcoin and ethereum digital currencies.

The service had 73 million users at the end of the third quarter, while the number of monthly transacting users (MTU) rose from 2.1 million a year earlier to 7.4 million.

It earns money mainly from the fees it charges for transactions made by users. So when interest in crypto declines, as it currently does, less Coinbase makes money.

Coinbase is one of the most popular crypto trading platforms in the United States. It is one of the few listed on the stock exchange.

Coinbase went public on April 14. Coinbase’s direct listing was seen as a sign that the crypto had made investing mainstream. After all, it would be a public company, subject to the scrutiny of regulation and reporting by large conventional companies.

According to CoinGecko, other major exchanges include Kraken, Bittrex, Crypto.com, and Binance, the world’s largest spot crypto exchange by trading volume.

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