Coinbase shares fall as bitcoin slides, FTX concerns rise

Coinbase CEO and Co-Founder Brian Armstrong speaks at the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California.

Patrick T. Fallon | AFP | Getty Images

Coinbase shares fell more than 8% on Monday, extending a slide that pushed the crypto exchange to its lowest point since its market debut in April 2021. The decline comes as bitcoins The crisis continues and investors are worried about contagion from FTX’s dramatic collapse earlier this month.

Nineteen months after going public with a market cap of over $85 billion, Coinbase has fallen below the $10 billion mark and lost more than a quarter of its value in the past four trading sessions.

Questions have swirled about the health of rival FTX exchanges, prompting industry-wide selloffs that have caused some companies to temporarily suspend exchanges and others to prepare for possible bankruptcy filings. Mizuho analysts wrote in a note on Friday that daily industry volumes were 30-40% below their average for the year.

Coinbase CEO Brian Armstrong said in an op-ed for CNBC on Nov. 11 that his company had “no material exposure to FTX,” but had “sympathy for everyone involved.” Coinbase shares are down more than 83% since the start of the year.

“It’s stressful whenever there’s the potential for losing customers in our industry, and a lot of people are losing a lot of money because of FTX’s struggles,” Armstrong said.

Bank of America downgraded Coinbase on Friday, citing “contagion risk” for the cryptocurrency exchange, even though it is not “another FTX.”

“This does not insulate them from the broader fallout within the crypto ecosystem,” Bank of America’s Jason Kupferberg wrote.

Prior to FTX’s descent, the market was in the midst of a crypto winter that sent bitcoin prices and ethereal downturn and forced a number of companies into bankruptcy. Earlier this month, Coinbase reported a drop in revenue of more than 50% in the third quarter compared to the previous year, and a loss of $545 million. In June, the crypto exchange reduced its workforce by 18%.

The ensuing selloff was even more extreme, with bitcoin falling more than 3% on Monday to its lowest level in more than two years, and ethereum more than 6%. Solana, a coin that was touted and backed by FTX founder Sam Bankman-Fried, lost more than two-thirds of its value in two weeks.

Within days, FTX went from a $32 billion valuation to bankruptcy as cash dried up, customers demanded withdrawals and rival exchange Binance tore up its non-binding deal to buy the company. FTX filed for Chapter 11 bankruptcy protection on November 11.

Bankman-Fried said the company’s assets were “good” two days before he desperately sought a rescue. He has since said in tweets that he was trying to collect deposits from the company’s customers.

LOOK: Full CNBC interview with Coinbase CEO Brian Armstrong

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