Wednesday was a bloody day for the markets in general, but the crypto sector is where investors were burnt the worst. Almost every crypto out there reported losses in the double-digit margins. Bitcoin prices are down around 15.0%, while Ethereum plunged as much as 50% at one point. Despite the chaos going on in the crypto market, cryptocurrency exchange Coinbase (NASDAQ: COIN) managed to earn an unexpected upgrade from Wall Street analysts.
Wedbush analyst Moshe Katri started covering Coinbase yesterday, issuing an “outperform” rating on the company and calling it a “one-stop-shop” for cryptocurrency investors around the world. He also said the platform had a clear “first mover” advantage over other exchanges that could go public in the future. What’s more, Coinbase doesn’t have the same regulatory issues that its next biggest competitor, Binance, has.
Most cryptocurrency trading, at least in the U.S., takes place on Coinbase. While Binance is more popular with international users, the platform has been barred from operating in the U.S. Instead, Binance has a dedicated U.S. platform, called BinanceUS, which has a much stricter selection of altcoins for trading. Coinbase currently has around 50 different tokens but is continuously adding more as time goes on.
Katri also says that the expected rise of institutional interest in cryptocurrencies will also help Coinbase expand as well. While most large investors haven’t really touched Bitcoin that much, the expected approval of Bitcoin ETFs, which are currently under review by the SEC, is expected to help further drive up institutional demand for crypto.
With Bitcoin currently sitting at around $39,000, time will tell how long this crypto crash is going to last. It could be just for a few days, or it could turn into another 2018-type situation, where Bitcoin fell by over 75% and stayed that way for years. Considering just how much speculative excitement was surrounding the world of crypto recently, it would make sense if this crypto bull market ended up cooling down for a while.
Considering how crypto prices crashed, it’s not surprising that Coinbase declined as well. The stock dipped by 5.9%, although it’s surprising that shares didn’t fall more. Most other crypto-related stocks reported losses as well, it’s peculiar that most of these companies’ stock losses weren’t that significant. Both Riot Blockchain (NASDAQ: RIOT) and MicroStrategy (NASDAQ: MSTR) saw their share prices fall less than 10%, making their shares less volatile than Bitcoin was. Often it’s the other way around.
Although that wouldn’t be the best for exchanges like Coinbase, the exchange will still likely do quite well for itself despite what could likely be lower trading volume going forward. The exchange managed to triple its revenue figures over the past three months, according to its Q1 results. Even if the company doesn’t grow more past its current income, that would still make the stock a resounding success.
Coinbase Company Profile
Coinbase Global Inc is a provider of end-to-end financial infrastructure and technology for the crypto-economy. It generates substantially all its net revenue from transaction fees from trades that occur on its platform. Geographically, it derives a vast majority of its revenues from the US followed by the rest of the world. – Warrior Trading News