Written by Brenda Nakalema

Coinbase drops mirroring wider Crypto dive

Following the slump in cryptocurrencies on Tuesday, shares of the cryptotrading platform followed suit and dropped as well. The largest …

Following the slump in cryptocurrencies on Tuesday, shares of the cryptotrading platform followed suit and dropped as well. The largest cryptocurrency by volume, Bitcoin, dropped nearly 5% reaching a low of $49,072.68. Ethereum was down 4.5%, Cardano and Terra declined 4.7% and 8.7%, respectively.

The volatility of Bitcoin is the stuff of legend, with the cryptocurrency reaching highs of $68,990.90 in November and hitting lows only spoken of by the bravest traders. Since its high, the currency has lost nearly 30% of its value and remained hovering around the $50,000 mark. The explanations forwarded for the currency volatility include rising interest rates, tighter liquidity in financial markets, and a shifting regulatory climate, making investors nervous in their seats.

Coinbase (Ticker: COIN) fell 5.2% on Tuesday to $265.66. The shares were trading nearly 20% below their April stock market debut. The third-quarter revenue and profits missed the mark and left investors disappointed. The shortfall was ostensibly blamed on lower volatility since trading volume, and transaction fee revenue correlate with higher volatility. This basically means that if trading volume declines and people are less active, then coinbase earns less in fees.

Trading volumes dropped to $ 327 billion in the quarter from a previous volume of $462 billion in the second quarter. The company’s slid down 13% in trading after the bell. Total revenue fell from $2.23 billion to $1.31 billion, missing estimates of $1.57 billion.

However, the resilience of digital currencies and the general excitement about what they could mean for the future entice many investors to remain in the crypto game even when the currencies fluctuate wildly- many investors still consider digital assets a viable future investment opportunity.

Coinbase was one of Oppenheimer’s top picks for 2022 last week, with analysts rating the stock at Outperform with a $444 price target.

According to Owen Lau, an analyst, institutional investors who are interested in learning more about digital assest could be a key segment for Coinbase. He also aluded to the fact that there might be many more potential investors sitting in the sidelines, waiting to be sufficiently convinced over the security of the investment.