Spread Thuesday , 07 June 2022
4 minutes reading
Bitcoin Crash Crushes Shares of America's Largest Cryptocurrency Company
 |
| Coinbase |
The collapse in the price of cryptocurrency Bitcoin has hit Coinbase hard, with the cryptocurrency brokerage reporting a loss in the first quarter, with revenue down 27% from a year ago, defying Wall's expectations. Street". Coinbase shares fell more than 25% on Wednesday, hitting an all-time low.
Coinbase stock is now down more than 75% this year and is trading 85% below its all-time high since November. Stocks have lost more than half their value in the past week alone.
The drop in the company's stock coincides with the massive decline in the value of Bitcoin, Ethereum and other cryptocurrencies over the past few months. Coinbase said in its earnings report that about 48% of its transaction revenue came from bitcoin and ethereum this quarter.
Bitcoin prices fell below $30,000, Wednesday, after the Consumer Price Index report on inflation.
As a result of the volatility, Coinbase reported a sharp decline in users, trading volume and assets from the fourth quarter. “The first quarter of 2022 continued the trend of lower crypto asset prices and volatility that began in late 2021,” she said in a letter to shareholders. But the company added that it remains "more excited than ever about the future of cryptocurrency."
However, investors appeared wary of new language in the Securities and Exchange Commission's Coinbase earnings report that warned of the risk of bankruptcy.
"In the event of bankruptcy, crypto assets that we hold on behalf of our clients can be subject to bankruptcy proceedings and such clients can be treated as generally unsecured creditors," the company said.
This could mean that customers will not be able to access the funds if Coinbase declares bankruptcy.
But CEO Brian Armstrong tried to reassure customers and clear up any confusion about the bankruptcy talk. In a series of tweets late Tuesday night, Armstrong wrote that "your money is as safe in Coinbase as ever," and added, "we have no risk of bankruptcy."
Armstrong wrote that the company was required to include bankruptcy warning language due to “newly required disclosure of public companies holding crypto assets to third parties” as a result of SEC rules.
Coinbase is arguably the most popular cryptocurrency company. It sparked a lot of interest earlier this year with a bizarre Super Bowl ad that has nothing more than a QR code that moves around the screen for 60 seconds.
Coinbase said in its earnings report that the advertisement "led to significant improvements in our brand awareness, preference and buying thinking."
Coinbase has also been busy adding other cryptocurrencies to its platform, such as Cardano. It has also launched a marketplace for non-fungible tokens (NFTs), digital assets that are becoming increasingly popular in the art and collectibles world. However, none of this was enough to stop the stock's massive slide.
The company went public last year through a direct listing on the Nasdaq and was immediately valued at nearly $100 billion. Coinbase's market value now hovers around $15 billion.
Spread Thuesday , 07 June 2022
Add Comments