The awakening is difficult in the cryptocurrency sector. With a market crash that sees bright red. And drops once again to be entered in the history books of this very young digital economy. But in the end, an almost identical repetition of a scenario already experienced several times in the past. All in the face of a kind of collective denial carried by the conviction that this time would be different. Because the market is more mature. As proof, the Coinbase platform went public… Precisely, let’s talk about it!
The current situation makes this rule resonate, as simple as it is violent. Even after losing 90% of its value, a cryptocurrency can still lose much more. Because there is not necessarily a limit to the number of zeros that can be placed after the comma. And that even in the case of a stable coin meant to stay pegged to the dollar such as an Ethereum network miner to their transaction fees. With a current level certainly “in the average,” but still at more than $100 for the basic operation on the Uniswap platform.
As proof, this new flash crash, carried away by a Bitcoin currently below the $28,000 level for the first time since… December 2020. And at the same time, iconic cryptocurrencies that have collapsed by an average of 35% over the past 24 hours. As for example ETH (-38%), AVAX (-36%), SOL (-36%) or the very young APE (-33%) of the Bored Ape Yacht Club. But ultimately a situation that has nothing to envy to the recent stock market version of this ecosystem, initiated last year by the Coinbase platform.
Coinbase – A catastrophic balance sheet
The decision of the Coinbase platform to prefer an IPO was a turning point in the cryptocurrency industry. Because it created a bridge that did not yet officially exist between these two worlds. With the prospect for some – and probably for the latter – of registering in a reputedly safer market. And the possibility, at least theoretically, of escaping the vagaries of capricious and sometimes devastating volatility. But it seems that even in this field it is difficult to deny its origins so simply. Because obviously, COIN stock is in big trouble.
In question, results were deemed clearly insufficient by its shareholders. With revenues currently downgraded ($1.17 billion) from Wall Street targets (around $1.5 billion). And this even though the last quarter of last year had allowed Coinbase to close on record performance. But that was in 2021.
Coinbase (COIN) – A Crypto Version Stock
Because since then, the price of its share has only fallen. To the point of collapsing again by -30% on yesterday alone. That is to say in the exact trend of the cryptocurrency market. Especially considering Brian Armstrong’s speech on the subject, in a very crypto style. The latter asserting that the current situation “offers discounted sale prices on the biggest companies in the world. » But is this really what traditional shareholders want to hear? Because it already makes many investors cringe in the cryptocurrency sector.
And meanwhile COIN stock is currently showing a loss in YTD close to -80% at the time of writing this article. With a price almost divided by 5 over this period alone ($251 / $53.70). That is to say, not really better than the cryptocurrencies cited as an example above. And much worse than BTC or ETH, “only” divided by around 2.5% over the same period. This if we take into account their respective ATH and not their prices as of May 12, 2021. Because in this case, BTC is -46% and ETH -55%.
But after all, the Coinbase platform is part of the strong bearish momentum and publicly listed companies related to the cryptocurrency industry. The latter face complicated balance sheets to expose to their shareholders in the midst of a market collapse. And a simple conclusion to this article: choosing the traditional stock market obviously does not allow you to escape the high volatility of the cryptocurrency market. A point to ponder…
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