Coinbase Shares Plunge, 28% Value Lost Since July

The momentum of the Coinbase rally has hit a roadblock, witnessing a decline of over 28% from its yearly peak in July, which had briefly surged beyond $110. This cryptocurrency exchange, which experienced a surge in share prices leading up to the release of its second-quarter earnings earlier this month, has seen an 11% dip over the past week. On Wednesday, shares displayed minimal movement, increasing by 0.1% to $79.28 at 1:27 p.m. ET, according to TradingView data.

Despite the ongoing legal battle with the U.S. Securities and Exchange Commission (SEC), Coinbase managed to maintain a bullish trajectory through much of June and July. This was partly attributed to the news that the company was collaborating with various asset management firms to roll out spot Bitcoin exchange-traded funds (ETFs).

Coinbase’s positive earnings report on August 3 further bolstered its position. However, the specifics regarding the potential revenue that the new spot Bitcoin ETFs could generate for the company remained undisclosed. Additionally, agreements with exchange platforms Cboe and Nasdaq for market surveillance sharing were contingent on the SEC’s approval of the funds.

Emilie Choi, the Chief Operating Officer, outlined Coinbase’s monetization strategy, emphasizing near-term revenue from AUCCs (Assets Under Custody and Control). She also highlighted the company’s anticipation of ancillary revenue streams from settlement and other services. Choi’s optimism is rooted in the belief that the introduction of spot ETFs would expand the cryptocurrency market and bring positive outcomes, considering these products are still navigating the registration and approval process.

Analysts tracking Coinbase’s stock have raised their price targets for the company since late June. Approximately 32% advocate a buy or overweight rating for COIN, while around 29% maintain a sell rating.

Coinbase’s stock performance has unfolded against the backdrop of a relatively sluggish crypto market, marked by historically low volatility for Bitcoin and significantly reduced trading volumes compared to 2020. The seven-day moving average for spot exchange volumes plummeted to $11.2 billion on August 15, a stark decline from the over $46 billion seen in March. This scenario poses challenges for platforms like Coinbase, which derive a substantial portion of their revenue from trading fees.

In the second quarter, Coinbase’s total transaction revenue reached $327.1 million, constituting around 46% of the overall revenue.

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