Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Goldman Sachs Downgrades COIN, As Stock Slides -79% YTD

By The Tokenist (Alo Kingsley )CryptocurrencyJun 29, 2022 07:17AM ET
www.investing.com/analysis/goldman-sachs-downgrades-coin-as-stock-slides-79-ytd-200626462
Goldman Sachs Downgrades COIN, As Stock Slides -79% YTD
By The Tokenist (Alo Kingsley )   |  Jun 29, 2022 07:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

As the market capitulation intensifies, Coinbase (NASDAQ:COIN) stock suffers blows caused by its dwindling revenue.

Goldman Sachs has demoted the ranking of US-based crypto exchange Coinbase Inc. to a “sell” rating. The investment banking firm revealed this information in a research report on Monday. Statistics also conveyed the behavioral change from market participants, adding credence to their position.

Crypto Winter Bashes Coinbase

Coinbase shares recorded an 11% drop from about $62 to $56.02 shortly after the announcement. Before this time, the digital currency exchange’s stock had slumped by over 75% since the beginning of the year. This sentiment correlates with the general crypto market, as Bitcoin’s price has also lost more than half its value since January 2022.

Last month, Twitter’s former boss, Jack Dorsey called the crypto exchange a “Casino” after losing 85% of its market cap since IPO. Goldman analyst, William Nance, pointed to the relentless downswing in the crypto market and the slowdown in trading activities. He also emphasized that the trading platform must enforce drastic measures to survive the harsh market conditions.

“We believe Coinbase will need to make substantial reductions in its cost base in order to stem the resulting cash burn as retail trading activity dries up.”

Last year, Coinbase enjoyed the booming crypto market and gained the spotlight in the equities market. The firm’s valuation went as high as $75 billion as Bitcoin price reached an all-time high.

After the rally, the crypto exchange has been inundated with numerous challenges. Given the loss of excitement in the market, trading activity slowed down significantly. The company’s valuation fell by over 81.3% from its peak, slipping below $14 billion.

This drop has translated into shrinking trade volumes and revenues for major crypto platforms, including exchanges. Data indicates that this selloff signals investors’ effort seeking to hedge their losses. In April 2021, Goldman Sachs (NYSE:GS) advised the trading platform on its direct listing.

On-Chain Data Corroborates Coinbase’s Dwindling Trading Activities

The sour disposition amongst investors has been reflected in the Coinbase premium gap. This metric measures the spread between Coinbase’s BTC-USD pair and Binance’s BTC-USDT pair. A negative premium value indicates weak buying pressure from US investors. On-chain data shows that this value tilted below the neutral level on April 29 and has remained there to date.

Coinbase Premium Gap
Coinbase Premium Gap

Coinbase Premium gap. Source: Cryptoquant

The Coinbase Premium gap fell as low as negative 87.8 before bouncing back to 17, still below the neutral level. The chart reveals that the last two months record the longest stretch with a negative spread.

Most negative premium gaps were in lockstep with a market downtrend. A closer observation reveals that this shift coincided with the price action that dragged Bitcoin price from $38,500 to $21,000. The exchange currently has twenty “buy” ratings, six “hold”, and five “sell” recommendations.

COIN was not spared from the chaos as the company’s stock plunged by 10% following the report from Goldman Sachs. The firm’s analysts dropped expectations of the price target to $45 from $70. Furthermore, the investment bank cited a potential loss of Coinbase’s revenue, stating that it could fall below 60% in the coming months. Trading experts believe darker days may be ahead as they predict that shares may tank further by 20%.

Trading fees constitute almost 90% of Coinbase’s revenue. This condition has left the exchange in a shaky position, as more investors may be looking to close their positions to avoid further losses.

Also, it appears competition may have become another source of concern for the digital asset exchange. Binance US has indicated an interest in latching on to Coinbase’s misfortunes to expand its user base in the United States. Earlier, this formidable rival announced a zero trading fee for BTC and intends to extend it to other cryptos.

After peaking at $353 in November 2021, Coinbase stock prices have suffered a significant loss. This figure hurtled down to the $50 price mark and has remained range-bound on this level. A daily chart of the tech stock shows another 4.78 points loss representing an 8.54% drop. At the time of writing, the COIN was trading at $51.18 and has been undulating within this level since May 11.

Goldman Sachs Downgrades COIN, As Stock Slides -79% YTD
 

Related Articles

Petros Steriotis
Bitcoin’s Case By Petros Steriotis - Aug 12, 2022 1

It is demanding to build a sustainable bullish case for Bitcoin for as long it is trapped within a corrective price channel that resembles a bearish flag on the daily...

Goldman Sachs Downgrades COIN, As Stock Slides -79% YTD

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Jeremiah Quaye
Jeremiah Quaye Jun 29, 2022 9:31PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
how do I deposit
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email