- Coinbase stock price has been in a strong freefall.
- The company's market cap has crashed from over $70 billion to $10 billion.
Coinbase stock price continued slumping this week amid a major turmoil in the cryptocurrency industry. The shares slipped to a low of $45.90, which was the lowest level since June this year. It has crashed by more than 80% this year. Other stocks with exposure to cryptocurrencies like Bakkt, MicroStrategy, and Argo Blockchain have also crashed.
Coinbase could benefit from FTX crash
Coinbase is the second-biggest cryptocurrency exchange in the world. It has a close correlation with the performance of Bitcoin and other cryptocurrencies. When these prices rise, the number of traders and investors in its ecosystem grow.
This year, the Coinbase stock price has tumbled by more than 80% as Bitcoin and other cryptocurrencies have plunged by over 50%. The number of its monthly transacting users and the amount of volume has crashed.
The situation worsened amid rising fears of contagion in the cryptocurrency industry. These fears emerged as one of its biggest competitors collapsed. FTX has been in the spotlight as it faced a major bank run.
Read our comprehensive review of Coinbase Pro.
Some investors believe that the collapse of FTX is equivalent to the Lehman moment, when one of the biggest banks in the US collapsed. In the aftermath, the government was forced to bail out other companies like Citigroup and JP Morgan.
However, there are chances that Coinbase will benefit following its crash. For one, Coinbase will likely see some of FTX’s users defect to its ecosystem. Coinbase is also known for having higher standards than other exchanges.
Coinbase published its quarterly results last week. The report showed that its total revenue crashed by more than 55% YoY to over $590 million. Its EPS crashed to -$2.15 per share while the number of monthly transacting users dropped to over 8.5 million. Coinbase faces two main risks: a bank run and more crypto weakness.
Coinbase stock price forecast
The daily chart shows that the COIN share price has been in a strong bearish trend. This sell-off has dragged its total market cap to about $10 billion, down from its all-time high of over $70 billion. The stock has managed to move below the important support level at $60.31.
COIN has also crashed below all moving averages while the Stochastic Oscillator has moved below the oversold level. Therefore, the path of the least resistance for Coinbase is still lower, with the next key level to watch being at $35.
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