The Nasdaq Composite dropped by around 1% on Monday. The damage, however, was much worse on the macro frame. The index has lost roughly around 30% over the past 12 months. Nevertheless, that doesn’t imply that the bottom is in. In fact, research firm DataTrek likely suggested the opposite.
Since the Nasdaq’s launch in 1971, there have been only four instances when the index has been down 30% or more over the previous 12 months. In three of the said four times, the bottom did not arrive until the index had fallen 50% or more.
Amid the macro slump, Coinbase’s share price dropped to a new all-time of $40.61 on Monday. Resultantly, COIN is down by more than 90% compared to its April 2021 peak.
Alongside, it is worth noting that Coinbase’s bond due maturity in 2031, has dropped 15% this month. As a result, the yield climbed to a high of 13.5%. As such, bond price and bond yield are inversely related. As the price of a bond goes down, the yield increases, and vice versa. The yield for the 2028 bond, on the other hand, has been hovering around 17.77%.
Opining on the current situation, UTXO Management’s Senior Analyst Dylan LeClair tweeted,
“Crypto native credit risk and risk premium has gone through the roof – debt markets are effectively frozen even for some of the largest firms. Not saying Coinbase is in trouble here, more just pointing to a notable public company with debt in public markets.“
He further asserted that “plenty” of firms were still out there with balance sheet impairment and debt that cannot be rolled or refinanced. As a result, per the analyst,
“A cleanse is underway.“
How has Coinbase been faring as an exchange?
Ever since the FTX collapse, most centralized exchanges have been trying to regain investors’ trust. Even Coinbase has been treading on the same path. The company recently provided clarity by chalking out its approach to transparency, risk management, consumer protection, and how its business was different.
A recent analysis by Messari revealed that Binance was the “main beneficiary” of the FTX collapse, for it gained 9.6% in market share. For context, FTX accounted for about 25% of global perpetual open interest prior to its collapse.
In terms of exchange trade volume, even Coinbase has noted an improvement lately. When compared to November 20th’s $593.39 million settled, the number surpassed the $2 billion mark already during the early trade hours of Tuesday.
