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Cryptocurrency platform and exchange Coinbase Global Inc. (NASDAQ:COIN) The stock has fallen along with the crypto market and the price of Bitcoin. However, after the disaster FTX hit a new all-time high of $40.15 on December 9, 2022, the situation worsened. Year-end tax-loss selling is underway as investors reconsider its merits. CryptocurrenciesY.
Coinbase has stated that it has no exposure to FTX or its token FTT as it cannot be traded on the platform, however, indirect exposure is another story. The company has exceptionally seen most of its metrics decline subscription and services, which raised guidance for the full year of fiscal 2022 to more than $700 million from $600 million.
Bitcoin is driving away believers
Bitcoin fell from a high of $69,000 on November 8, 2021, to a low of $15,480 on November 21, 2022. Cryptocurrency Has no intrinsic value but rather moves on supply and demand generated from news, rumours, speculation, regulatory actions and general sentiment.
It was once perceived as a store of value stemming from the 2013 Cyprus banking crisis, where citizens converted their bank savings to Bitcoin to avoid a government bailout of its banks by confiscating its citizens’ bank deposits. That was then, this is now. Bitcoin has proven to be neither a store of value, a stable currency for purchasing goods and services, nor a hedge against inflation, interest rates, or a falling stock market.
In fact, the entire crypto industry has lost $2 trillion dollars in the last year alone in the global pump and dump game of musical chairs. 75% are Bitcoin investors At a loss of money. Companies etc MicroStrategy Incorporated (NASDAQ: MSTR ) Having invested their money in Bitcoin, their stock fell from a high of $1,315 in February 2021 to $134.09 15 months later.
Tesla Inc. (NASDAQ: TSLA ) An estimated 75% of its $1.5 billion holdings in Bitcoin were worth the loss ($170 million). Bitcoin miners love it Marathon Digital Holdings Inc. (NASDAQ: MARA) And Riot Blockchain Inc. (NASDAQ: RIOT ) Shares have fallen (-84%) and (-81%) year-to-date (YTD). Block, Inc. (NYSE: SQ ) The stock appears to be reeling from its exposure to crypto trading.
FTX corruption infection
The world’s third largest crypto exchange in 2021 is FTX Exchange, which specializes in derivatives and leveraged products. FTX was launched in 2019 by Sam Bankman-Fried. FTX stands for Futures Exchange. FTX had a bank running on its FTT token, which led to a $5 billion withdrawal on Nov. 6 amid allegations of fraud with Alameda, triggering a liquidity crisis that spiraled out of control.
It went from a valuation of $32 billion Bankruptcy In a few days. On November 11, 2022, Chapter 11 found that a sister company, Alameda Research, had ties to an additional 150 companies with more than 1 million creditors.
Allegations of fraud, mismanagement and lack of corporate controls swept the crypto world as the Financial Times reported that FTX had $9 billion in liabilities and only $900 million in marketable assets.
This has triggered bankruptcies and speculation across the board with a domino effect. From the implosion of Three Arrows Capital to crypto firms Voyager, Celsius, and BlockFi, everything has filed for Chapter 11 bankruptcy stemming from liquidity crunches.
Daily headlines of other crypto companies facing liquidity problems stemming from the FTX crash have led to speculation about Coinbase’s exposure, which the company has denied. when Robinhood Markets (NASDAQ: HOOD) Says it has no exposure to FTX, Sam Bankman-Fried has a 7.6% stake in Robinhood. Contagion fears continue to ripple through the industry and the stocks of related companies.
They are hard to fall
Coinbase released its fiscal third quarter 2022 results for the quarter ending September 2022. The company reported an earnings per share (EPS) loss of (-$2.43) and (-$1.46), missing consensus analyst estimates by (-$0.96). Revenues (-55%) fell year-over-year (YoY) to $590.34 million, falling short of consensus analyst estimates of $641.88 million. Monthly transaction users fell (-16.4%) to 8.5 million. Trade volume (51%) fell to $159 billion.
CEO Brian Armstrong said in his conference call, “We at Coinbase have been through four crypto cycles in the last 10 years. It’s funny, I actually enjoyed the bottom cycles a little more. In up cycles, tons of scaling efforts have to happen, and sometimes a lot of people rush into crypto for the wrong reasons. In down markets, you have to focus on building, everyone is a true believer and a true builder, and it’s no different in this case. There’s a ton of innovation going on.
Moderate forecast
Coinbase gave its forecast for 2022, expecting average MTUs to drop below 9 million and an average transaction per user of $20. This boosts its subscription and services revenue from $600 million to $700 million. It is cautiously optimistic that it will operate on a $500 million adjusted EBITDA loss reserve.
In fiscal 2023, the company expects pressure on transaction revenues to continue. It may continue to manage costs and reduce costs and develop disclosures of its business metrics to better align with business performance, including changes and eliminations of certain metrics.
A falling meat cleaver
The adage “don’t catch falling knives” applies to COIN’s stake. Instead of a falling knife, the shape and size of the slope from $429.54 height resembles a falling meat cleaver as each rally is cut back down low at the knees or back down into bear vines. On December 9, 2022, the weekly Bollinger Bands appear to have narrowed and widened again as investors took part in tax-loss selling. The weekly stochastic dips to the 10-band and continues to decline. Bullback supports are at unprecedented levels at $32.64, $25.42, $20.61, $15.26, $10.45 and $5.10.
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