The leading crypto exchange is unlikely to pause withdrawals but remains susceptible to one concerning trend.
Coinbase Global saw its shares on a sharp plummet on Monday, opening 21% down from the Friday close and trading 14% lower today. The cryptocurrency spectrum struggled over the weekend, and market players often use Coinbase to gauge sentiment among traders interacting with BTC and other cryptos.
Indeed, the massive crypto price drop contributed to the deteriorated sentiment by investors, but that was not the entire story. News about smaller exchanges planning to pause withdrawals triggered new investor worries.
Though the probability of Coinbase taking similar steps remains low, one factor of what is happening in the crypto world today. And could impact the firm’s future projections.
Two Vital Events During the Weekend
The abrupt decline within the cryptocurrency market injured COIN shares. Bitcoin hovered around $30K on Friday afternoon before slumping towards $23.5K early Monday. The altcoin market suffered amid such conditions, surrendering large chunks of its value.
Though the crypto world isn’t new to such massive declines, the ongoing one brought some stress signals that crypto companies face at the moment. Celsius Network, a leading crypto lender and DeFi platform said it would halt transfers between and withdrawals from accounts. Such developments amplified the already existing market fear.
That troubled market players as Celsius had acquired massive publicity in the past. It offered impressive interest rates for cryptocurrency deposits, lending them to accumulate revenue.
Meanwhile, skeptics highlighted loans the DeFi network took with different digital assets as collateral, indicating that margin calls might trigger cascade effects amid extreme market atmospheres, threatening Celsius survival while sending ripple effects across the financial space.
What Should Concern Coinbase Investors
Coinbase is a leading company and is less likely to resort to pausing withdrawals like Celsius. The reputational impact from such moves would devastate the global exchange, and Coinbase would act better than adding more pressure in an adverse environment as far as the crypto business is concerned.
Nevertheless, Coinbase cannot control pessimism within the broad investing community toward digital asses, and its business model depends on crypto-mainstream acceptance to support growth. Meanwhile, the threat emerges at a challenging time for Coinbase as it experiences some controversy with the employee base.
Workers kick-started a movement to eliminate some executives, citing poor strategic planning and business failure. That came after Coinbase withdrew previously granted jobs and declared a hiring freeze.
