Live by the bitcoin, die by the bitcoin.
More specifically: Bitcoin holds promise one day, is imperiled the next — with implications for the crypto sector at large — and drags companies like Coinbase seemingly in lockstep.
So it may be no surprise with such uncertainty surrounding bitcoin and its brethren, that Coinbase, at a recent $232 and change, amid the news Friday (Sept. 24) that China is effectively banning all crypto transactions, is trading well below its direct listing price seen in April. The recent pricing on COIN shares is also well below the $429 peak set earlier in the year. It’s a “busted” IPO, indeed, leading one to ponder whether the investor flight from the exchange (that’s Coinbase’s core business) reflects the sentiment that it is crypto that is busted.
Back in the days when tweets carried the day (OK, they still do, but the specter of regulations carry more weight), and Elon Musk would opine about bitcoin and Dogecoin, and whether Tesla etc. would accept crypto (now they do, now they don’t, depending on the month), COIN shares would wax and wane. For example, back over the summer, when Coinbase was in the doldrums, trading in the $220s, Musk said Tesla would be “likely” to take bitcoin as payment again — which sent Coinbase shares back up into the $260s. Earnings helped in no small part too, for that bounce.
As we noted back then, revenues, which surged to $2.2 billion from $186 million a year ago, were better than the $1.9 billion expected. Trading volumes were $462 billion, surging from the $335 billion seen in the fiscal first quarter. One key metric has been and in future earnings reports will be the monthly transacting users, which were up by 44 percent, as compared to the first quarter, to a recent 8.8 million, and well above the 1.5 million seen a year ago.
Read also: Coinbase Monthly Transacting Users Surge 44 Pct
A Bumpy Ride that Will Stay Bumpy
There already have been indications that things will be uneven, to say the least. As Coinbase had said in its reports, retail MTUs and trading had “slightly improved compared to July levels but remain lower than earlier in the year. As a result, we believe retail MTUs and total trading volume will be lower in Q3 as compared to Q2.”
It stands to reason that that volatility will become more pronounced as the regulatory pictures in the U.S. and China become more restrictive. If major world economies look askance at cryptos in general (and not just bitcoin, though bitcoin is shorthand for crypto), no amount of headlines generated by, say El Salvador, which has embraced bitcoin as legal tender, can compensate.
Incidentally, Coinbase has said that products like Coinbase Card and Coinbase borrow will expand the crypto economy, but in recent weeks it scuttled a lending product that would have been tied to stablecoins due in part to jousting with the Securities and Exchange Commission (SEC) over regulatory clarity.
Read more: Coinbase Kills Lend Product Amid SEC Ire
The move toward getting cryptos firmly entrenched in mainstream commerce (which would also boost the fortunes of the exchanges) is no slam dunk, and one need only to take stock — of COIN stock — to see just how bumpy the ride has and will be.
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