Silver Spring: cryptocurrency trading platform coinbase It has lost half its value over the past week, including its biggest one-day drop to date on Wednesday as famously volatile. crypto Market season another recession.
Coinbase reported a net loss of $430 million, or $1.98 per share, in the first quarter on declining sales and active users. Analysts were expecting gains of 8 cents per share. Revenue declined due to a drop in trading volume and a 19% drop in active monthly users from the fourth quarter.
It’s unlikely those results surprised investors — shares of Coinbase Global Inc. were down 43% in four days, according to their earnings release on Tuesday. The stock fell 26% to $53.72 per share on Wednesday. On the day of its initial public offering just 13 months ago, prices peaked at $429 per share.
Patrick O’Shaughnessy, an analyst covering Coinbase for Raymond James, admitted in a note to clients that there was debate as to whether the crypto market was one of its distinctive funks or if it was a post-pandemic bubble. Was.
“While management strongly believes that the former will prove to be true, we suspect there is some greater truth to the latter, particularly with crypto failing to act as an inflation hedge so far in 2022,” O. ‘ wrote Shaughnessy.
Like much of Wall Street, O’Shaughnessy said his firm expects Coinbase to continue to lose money in the coming quarters, and that “the cons of increased crypto regulation down the road will certainly outweigh the pros.” ”
Government officials have made it clear that regulation is coming. Treasury Secretary Janet Yellen said in April that more government oversight is needed in the fledgling industry and that over the next six months, the Treasury will work with the White House and other agencies to develop reports and recommendations on digital currencies.
“Our regulatory framework should be designed to support responsible innovation while managing risks – particularly those that can disrupt the financial system and economy,” Yellen said.
On Tuesday, Yellen testified to the Senate Banking Committee, warning legislators about stablecoins, which are digital currencies typically pegged to a commodity like the dollar or gold. In theory, stablecoins are better suited for commercial transactions than other cryptocurrencies that can fluctuate in value. Stablecoins essentially promise investors that they can be redeemed for a dollar. However, its recent run on the TeraUSD stablecoin dropped its value to 30 cents, raising doubts among investors about the safety of the stablecoin. Earth Recovered somewhat on Wednesday, reaching around 68 cents.
“The outstanding stock of stablecoins is growing very rapidly and we really need a coherent federal framework,” Yellen told the committee, adding that a law on stablecoins could be drafted by 2023.
President Joe Biden signed an executive order on digital assets in March, urging federal Reserve To find out whether central banks should create their own digital currency. Biden’s order also directed federal agencies to study the impact of cryptocurrencies on financial stability and national security.
In a letter to shareholders, Coinbase said it believes the current market conditions are not sustainable and that it is focused on the long term, prioritizing product development.
Coinbase reported a net loss of $430 million, or $1.98 per share, in the first quarter on declining sales and active users. Analysts were expecting gains of 8 cents per share. Revenue declined due to a drop in trading volume and a 19% drop in active monthly users from the fourth quarter.
It’s unlikely those results surprised investors — shares of Coinbase Global Inc. were down 43% in four days, according to their earnings release on Tuesday. The stock fell 26% to $53.72 per share on Wednesday. On the day of its initial public offering just 13 months ago, prices peaked at $429 per share.
Patrick O’Shaughnessy, an analyst covering Coinbase for Raymond James, admitted in a note to clients that there was debate as to whether the crypto market was one of its distinctive funks or if it was a post-pandemic bubble. Was.
“While management strongly believes that the former will prove to be true, we suspect there is some greater truth to the latter, particularly with crypto failing to act as an inflation hedge so far in 2022,” O. ‘ wrote Shaughnessy.
Like much of Wall Street, O’Shaughnessy said his firm expects Coinbase to continue to lose money in the coming quarters, and that “the cons of increased crypto regulation down the road will certainly outweigh the pros.” ”
Government officials have made it clear that regulation is coming. Treasury Secretary Janet Yellen said in April that more government oversight is needed in the fledgling industry and that over the next six months, the Treasury will work with the White House and other agencies to develop reports and recommendations on digital currencies.
“Our regulatory framework should be designed to support responsible innovation while managing risks – particularly those that can disrupt the financial system and economy,” Yellen said.
On Tuesday, Yellen testified to the Senate Banking Committee, warning legislators about stablecoins, which are digital currencies typically pegged to a commodity like the dollar or gold. In theory, stablecoins are better suited for commercial transactions than other cryptocurrencies that can fluctuate in value. Stablecoins essentially promise investors that they can be redeemed for a dollar. However, its recent run on the TeraUSD stablecoin dropped its value to 30 cents, raising doubts among investors about the safety of the stablecoin. Earth Recovered somewhat on Wednesday, reaching around 68 cents.
“The outstanding stock of stablecoins is growing very rapidly and we really need a coherent federal framework,” Yellen told the committee, adding that a law on stablecoins could be drafted by 2023.
President Joe Biden signed an executive order on digital assets in March, urging federal Reserve To find out whether central banks should create their own digital currency. Biden’s order also directed federal agencies to study the impact of cryptocurrencies on financial stability and national security.
In a letter to shareholders, Coinbase said it believes the current market conditions are not sustainable and that it is focused on the long term, prioritizing product development.