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Coinbase Shares Drop as Bitcoin Slide Continues, Investors Fear Contagion from FTX Collapse

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Coinbase Shares Drop as Bitcoin Slide Continues, Investors Fear Contagion from FTX Collapse

(CTN News) – A decline that has sent the cryptocurrency exchange’s stock price to its lowest position since its market debut in April 2021 continued Monday as Coinbase shares finished more than 8% lower. The decline occurs as investors worry about a spillover from FTX’s stunning collapse earlier this month, and the downturn in bitcoin continues.

Coinbase has slipped below the $10 billion level and lost more than a quarter of its worth in the last four trading sessions, 19 months after coming public with a market valuation of over $85 billion.

As concerns about the stability of FTX’s competing exchanges have grown, widespread sell-offs have led to some businesses temporarily suspending trade and others preparing for possible bankruptcy filings. In a report published on Friday, Mizuho analysts said that daily volumes in the sector are now running 30% to 40% below their yearly average.

Brian Armstrong, the CEO of Coinbase, wrote an opinion piece for CNBC on November 11 and said that although his business has “no substantial exposure to FTX,” he has “sympathy for everyone involved.” To date,  Coinbase Shares have decreased by more than 83%.

In our profession, it’s worrisome each time a client may leave, and FTX’s problems are costing a lot of people a lot of money, according to Armstrong.

Even if Coinbase is not “another FTX,” Bank of America downgraded the bitcoin exchange platform on Friday, citing “contagion risk.”

According to Jason Kupferberg of Bank of America, “it does not make them immune from the wider ramifications inside the crypto ecosystem.”

Before FTX’s collapse, the market was experiencing a “crypto winter” that had driven down the price of bitcoin and ethereum and several businesses into insolvency.

Earlier this month, Coinbase announced a loss of $545 million and a third-quarter sales decline of more than 50% from the prior year. The cryptocurrency exchange reduced 18% of its personnel in June.

The ensuing sell-off has been even more severe, with ethereum losing almost 6% and bitcoin plummeting more than 3% on Monday to its lowest level in more than two years.

Sam Bankman-Fried, the creator of FTX, promoted and supported the cryptocurrency Solana, but it has lost over two-thirds of its value in only two weeks.

As liquidity dried up, users requested withdrawals, and rival exchange Binance pulled up its non-binding agreement to purchase the firm, FTX plummeted from a $32 billion value to insolvency in a few days. On November 11, FTX filed a Chapter 11 bankruptcy petition.

The company’s assets were “fine,” according to Bankman-Fried, two days before he became frantic for help. Since then, he has said in tweets that he is working to collect deposits for the business’s clients.

Related CTN News:

Coinbase Shares Drop On Billion-Dollar Loss In Second Quarter And Revenue Miss

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