What Caused Today’s Drop In Coinbase Stock Price? Problems With FTX and USDC Are Causing Concern

Coinbase Stock

Coinbase Stock (NASDAQ:COIN)

As concerns regarding FTX continue to circulate around the cryptocurrency industry, investors in Coinbase Global (NASDAQ:COIN) sent the company’s shares down by 9.2% on Tuesday.

Sam Bankman-Fried was arrested on Monday evening, and FTX’s current CEO, John J. Ray, III, testified before a House committee today, revealing that FTX had “virtually no” internal controls or recordkeeping regarding how funds were linked across SBF’s empire. Both of these pieces of information are absorbed by the markets today. In addition, the Securities and Exchange Commission (SEC) initiated legal action against SBF, claiming that the latter deceived FTX’s clients and investors.

Coinbase stock link with USD Coin is another factor that might bring about the stock’s decline (OTC:USDC). On Tuesday, because the Binance exchange had a net withdrawal volume of around $1.4 billion throughout the session, USDC withdrawals were temporarily halted for a few hours.

Coinbase and Circle Internet Financial both own a stake in USD Coin (OTC:USDC), which significantly contributes to Coinbase’s overall interest income. Coinbase holds its share in USD Coin via Circle Internet Financial.

Since the beginning of May, the Quant system at SA has warned that Coinbase (COIN) has a significant potential for underperformance.

Mizuho lowered its rating on Coinbase stock to Underperform the previous week, calling into doubt the cryptocurrency exchange’s potential for interest revenue.

Featured Image: Unsplash @ PiggyBank

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