Coinbase Leads Crypto Stocks Lower as FTX Collapse Leads to Confidence Crisis -- Barrons.com

Dow Jones2022-11-21
By Angela Palumbo 

Coinbase Global and other crypto-related stocks were declining Monday as the price of Bitcoin fell amid the continued fallout from the collapse of crypto platform FTX.

The price of Bitcoin, the world's largest cryptocurrency, has fallen 2.6% over the past 24 hours to $16,132. The decline of Bitcoin comes after FTX filed for bankruptcy earlier this month, and its founder and Chief Executive Sam Bankman-Fried resigned. FTX's new CEO, John J. Ray III, said in a filing that he had never seen "such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here."

FTX said in a bankruptcy filing on Saturday that it owes its 50 largest creditors around $3.1 billion.

The collapse of FTX has caused some traders to lose confidence in and question the legitimacy of digital currencies. That could be a problem for crypto trading platforms and other crypto-related stocks.

Coinbase (ticker: COIN) tumbled 4.6% in premarket trading Monday, while Marathon Digital Holdings $(MARA)$ dropped 4.5%, Riot Blockchain $(RIOT)$ fell 3.7%, MicroStrategy $(MSTR.AU)$ declined 2.6%, and Bit Digital $(BTBT)$ was down 2%.

Even though a large competitor has been eliminated from the space, which gives Coinbase the ability to gain market share over the long-term, BofA Securities analyst Jason Kupferberg wrote Friday that the stock's decline in the near-term has only just begun.

"Diminished confidence in the crypto ecosystem (especially among retail crypto users) is likely to dampen overall trading activity," Kupferberg said. "In the wake of the FTX news, transaction volumes spiked, but we expect this to be fleeting as some users sell their assets to leave crypto entirely and others move their crypto assets off exchange and into cold storage."

Kupferberg added that any near-term government regulations on crypto will now most likely be delayed amid the FTX fallout, and the full impact of this situation will most likely take weeks before its fully understood. He downgraded shares of Coinbase to Neutral from Buy on Friday and cut his 12-month price target to $50 from $77.

Write to Angela Palumbo at angela.palumbo@dowjones.com

 

(END) Dow Jones Newswires

November 21, 2022 09:18 ET (14:18 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment