House of Cards
Coinbase, the second largest cryptocurrency exchange by trading volume, is really feeling the pressure following the collapse of rival exchange FTX.
The company’s shares hit astonishing lows this week, sliding a whopping nine percent on Monday alone. Major cryptocurrencies including Bitcoin and Ether have also tumbled, with the former hitting two-year lows this week.
Coinbase’s shares haven’t been this low since April 2021, marking the latest fallout of the ongoing cryptocurrency crisis, CNBC reports. Over that same period, the company’s valuation has crashed from a market cap of over $85 billion to below $10 billion.
It all casts the future of the crypto industry into doubt. The company is already coping with major losses and was forced to cut its workforce by 18 percent this summer.
The news also comes after now bankrupt rival exchange FTX imploded in spectacular fashion, wiping out a $32 billion valuation in a matter of days. The collapse sent ripples throughout the industry, with rival exchange BlockFi, which is reportedly preparing for a potential bankruptcy filing, poised to follow suit.
Coinbase’s leadership has been in damage control mode, trying to calm investors. CEO Brian Armstrong maintained in an op-ed published by CNBC days after FTX’s collapse that the exchange does not have “any material exposure to FTX.”
“It’s stressful any time there is potential for customer loss in our industry, and a lot of people are losing a lot of money as a result of FTX’s struggles,” he wrote.
Analysts, however, are wary of another crypto disaster.
“We feel confident that Coin is not ‘another FTX,'” analyst Jason Kupferberg wrote in a note, as quoted by Bloomberg. “But that does not make them immune from the broader fallout within the crypto ecosystem.”
One major question: how low is the cryptocurrency industry prepared to go?
Crypto lender Genesis, faced with the possibility of a bankruptcy filing, approached Binance for a bailout this week, The Wall Street Journal reports.
Binance, tellingly, chose not to invest.
READ MORE: Coinbase shares tumble as bitcoin slide continues, investors fear contagion from FTX collapse [CNBC]
More on Coinbase: Coinbase Reportedly Under Investigation by the SEC
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