SILVER SPRING, Md. (AP) – Cryptocurrency trading platform Coinbase lost half its value last week, including the biggest overnight drop on Wednesday as another drop in the cryptocurrency market’s known volatility.
Coinbase reported a net loss of $ 430 million in the first quarter, or $ 1.98 per share, due to sales and active users. Analysts expect an 8 cent increase in the rally. Revenue dropped due to lower trading volume, while active monthly customers dropped 19% from the fourth quarter.
These results are unlikely to surprise investors: Coinbase Global Inc shares. fell 43% in the four days leading up to the announcement of their earnings on Tuesday. The stock dropped 26% to $ 53.72 per share on Wednesday. Just 13 months ago, on the day of its initial public offering, the price reached $ 429 per share.
Patrick O’Shaughnessy, an analyst who covers Coinbase for Raymond James, admitted in a note to customers that there is an ongoing debate over whether the cryptocurrency market is in one of its typical funks if it is a post bubble crash. -pandemic.
“While management firmly believes that the former will be reality, we suspect that there is little more reality in the latter, especially when cryptocurrencies fail to act as a hedge from inflation in 2022,” O’Shaughnessy wrote.
Like most on Wall Street, O’Shaughnessy said his company expects Coinbase to continue to lose money in the coming quarters and that “the biggest drawback of cryptocurrency regulation is clearly greater than the benefits . “
Government officials explained that regulation was imminent. Treasury Secretary Janet Yellen said in April that more government oversight is needed in the new sector and the Treasury will work with the White House and other agencies over the next six months to develop reports and recommendations on digital currencies.
“Our regulatory frameworks need to be designed to support responsible change in risk management, especially one that could disrupt the financial and economic system,” Ellen said.
On Tuesday, Yellen testified before the Senate Banking Committee and warned lawmakers about stablecoins, which are digital currencies typically pegged to dollars or commodities like gold. In theory, Stablecoins are better suited for commercial transactions than other cryptocurrencies that can withstand volatility. Stablecoins essentially promise investors that their redemption is possible in dollars. However, the recent launch of TerraUSD stablecoin lowered its value to 30 cents, leaving investors with doubts about the safety of stablecoin. Terra recovered slightly, to about 68 cents on Wednesday.
“Stable stocks are growing at a very fast pace and we really need a coherent federal framework,” Ellen told the committee, adding that the stablecoin law will be implemented in 2023.
President Joe Biden signed Executive Order on Digital Assets In March, he called on the Federal Reserve to examine whether the central bank should create its own digital currency. Biden’s order also instructed federal agencies to study the impact of cryptocurrency on financial stability and national security.
In a letter to shareholders, Coinbase said they believe current market conditions are not consistent and remain focused on the long-term outlook, prioritizing product development.
Source: Huffpost
