Coinbase Global Inc (NASDAQ: COIN) share prices took a nose-dive on Wednesday. In what was generally a bad day for crypto, the crypto exchange’s stock was down 6% to $219.16 per share as markets opened. This was 8% less than its April 14 $250 market debut reference price.
Wednesday’s total cryptocurrency market value was down a fourth at $1.57T in a period of just 24 hours. Top cryptocurrencies Bitcoin and Ether we’re not spared. Although its YTD value has increased by 25% and it has the biggest market capitalization of any digital asset, Bitcoin took a tumble yesterday. At one point going from about $38,000 to $30,000 in just an hour. Ether prices took a dip of about 40%. Its YTD remains 268% up.
However, today in the pre-market, the Coinbase (COIN) stock is 3.42% up, trading at $232.49.
OANDA Global Markets’ Edward Moya thinks the crash is bad for Coinbase’s business and might deter potential customers. He describes Coinbase as “one of the worst direct listings ever”.
“Coinbase wants new crypto traders, but many will be afraid that this Bitcoin crash could end up just like the one in 2017. Coinbase’s trading debut coincides with the top for Bitcoin and many traders can’t make a convincing argument that it will be able to recover all those losses since then”, Moya says.
The BBC reports that the dip can be attributed to Chinese regulators warning businesses and financial institutions against accepting payments made in crypto and offering crypto services. They report that three government-backed institutions including the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China published a warning online. They warned that anyone incurring losses from crypto investments would not have any protection.
Markets.com’s Neil Wilson notes:
“China has for some time been putting pressure on the crypto space, but this marks an intensification – other countries might follow now as central banks make strides towards their own digital currencies […] Until now, Western regulators have been pretty relaxed about Bitcoin, but this might change soon.”
As Bitcoin is the biggest cryptocurrency, it makes sense that Coinbase’s stock is linked to Bitcoin prices. Therefore, the recent decision by Tesla to drop the asset as a form of payment that resulted in Bitcoin prices plummeting has been offered as a reason for the crash.
Because the crypto market is generally bullish, it can be expected that Coinbase stock will recover when Bitcoin does.