Coinbase Global (COIN) wants to be seen as something other than an exchange primarily offering the ability to buy and sell cryptocurrency.
Unfortunately for the platform - the largest in the U.S. and most commonly used in the U.K. - its future seems for the moment linked to that of crypto.
Its stock is one of the collateral victims of the cryptocurrency crash, which has already wiped out more than $1.3 trillion since record highs were set in early November.
Coinbase lost 13.38% on Friday to end the session at $191.97. The stock price is now well away from its IPO price of $310 dollars last April. On that day, its market cap stood at 85.6 billion dollars. It has dropped by $35 billion in less than a year.
Since January, Coinbase investors have seen $16 billion in market capitalization evaporate in the rout of cryptocurrency markets.
The platform has not yet had time to catch its breath.
"What a week, " the company posted on Twitter on January 21, adding "Drop an emoji to show us how you're feeling..."
Robinhood (HOOD), the popular trading app that has been lobbied to be authorized to offer as much coins as possible on its platform, is also feeling the pain. The company is very popular with retail traders.
The stock has fallen 27% since the start of the year, at $12.98 dollars, below its IPO price of $38 dollars.
Coinbase Is Too Dependent on Bitcoin, Ethereum
Most transactions on Coinbase involve bitcoin and ethereum, which have been in freefall for the past five weeks. The top two cryptocurrencies by market cap have lost 48.1% and 48.7% respectively since their November 10 all-time highs.
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Bitcoin and ethereum together accounted for 43% of Coinbase's $1.1 billion in transaction revenues in the third quarter.
The company has said that its short-term performance will largely be determined by crypto prices.
Founded in 2012 as a way to simplify the purchase of bitcoin, Coinbase has emerged as the most popular crypto exchange in the U.S. and soared in value alongside digital currencies bitcoin and ethereum.
The service has 73 million users at the end of the third quarter, while the number of monthly transacting users (MTUs) climbed from 2.1 million a year earlier to 7.4 million.
It earns money mainly through the fees it charges for transactions made by users. So when interest in crypto declines, as it currently does, less Coinbase makes money.
Coinbase is one of the most popular crypto trading platforms in the United States. It is one of the few listed on the stock exchange.
Coinbase went public on April 14. Coinbase’s direct listing was taken as a sign that crypto had made the investing mainstream. After all, it would be a public company, subject to intense regulatory and reporting scrutiny of conventional large firms.
Other major exchanges include Kraken, Bittrex, Crypto.com and Binance, the world’s largest spot crypto exchange by trading volume, according to CoinGecko.
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