Coinbase Loses Half of Its Value in a Week as Crypto Plunges – Boston News, Weather, Sports

SILVER SPRING, Md. (AP) – Cryptocurrency trading platform Coinbase has lost half its value over the past week, including its biggest one-day drop of 5o on Wednesday as the notoriously volatile crypto market weathers another plunge.

Coinbase reported a net loss of $430 million, or $1.98 per share, in the first quarter on declining revenue and active users. Analysts had expected earnings of 8 cents per share. Revenue fell as trading volume fell, and monthly active users fell 19% from the fourth quarter.

Those results are unlikely to have surprised investors — shares of Coinbase Global Inc. fell 43% in the four days leading up to Tuesday’s earnings release. On Wednesday, shares fell 26% to $53.72 per share. On the day of the IPO just 13 months ago, prices reached $429 per share.

Patrick O’Shaughnessy, an analyst covering Coinbase for Raymond James, acknowledged in a note to clients that there was an ongoing debate as to whether the crypto market was in one of its signature funks or if this was the post-pandemic bubble , which emptied.

“While management is adamant that the former will prove true, we suspect the latter holds more than a modicum of truth, especially given that crypto hasn’t served as an inflation hedge so far in 2022,” O’Shaughnessy wrote.

Like many on Wall Street, O’Shaughnessy said his firm expects Coinbase to continue losing money in the coming quarters and that the “cons of increased crypto regulation going forward will decisively outweigh the benefits.”

Government officials have made it clear that regulation is coming. Treasury Secretary Janet Yellen said in April that more government oversight was needed in the fledgling industry and that the Treasury Department would work with the White House and other agencies over the next six months to develop reports and recommendations on digital currencies.

“Our regulatory frameworks should be designed to support responsible innovation while managing risks – particularly those that could disrupt the financial system and economy,” Yellen said.

On Tuesday, Yellen testified before the Senate Banking Committee, warning lawmakers about stablecoins, which are digital currencies typically pegged to the dollar or a commodity like gold. In theory, stablecoins are better suited for commercial transactions than other cryptocurrencies, which can fluctuate in value. Stablecoins essentially promise investors that they can be redeemed for a dollar. However, a recent run on stablecoin TerraUSD dropped its value as low as 30 cents, raising doubts about the safety of stablecoins among investors. Terra recovered somewhat to around 68 cents on Wednesday.

“The outstanding stock of stablecoins is growing very fast and we really need a unified federal framework,” Yellen told the committee, adding that stablecoin legislation could be drafted by 2023.

President Joe Biden signed an executive order on digital assets in March, asking the Federal Reserve to consider whether the central bank should create its own digital currency. Biden’s order also directed federal agencies to investigate the cryptocurrency’s impact on financial stability and national security.

In a letter to shareholders, Coinbase said it believes current market conditions are not permanent and remains focused on the long-term while prioritizing product development.

(Copyright (c) 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, transcribed, or redistributed.)

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https://whdh.com/news/coinbase-loses-half-its-value-in-a-week-as-crypto-slumps/ Coinbase Loses Half of Its Value in a Week as Crypto Plunges – Boston News, Weather, Sports

Nate Jones

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