Could Coinbase Lose Its Position as a Major Crypto Player?

Could Coinbase lose its position as the number one digital currency exchange in the western hemisphere?

Coinbase Is Really Hitting the Bottom

The crypto exchange is often cited as one of the largest and most popular crypto trading companies in the world. It was also the first digital currency exchange to ever go public, first joining the Nasdaq in April of last year. Things were looking up for the exchange, and many felt the company was going to reach a peak unlike anything that has ever been achieved in the crypto arena, but now it looks like things are falling apart for Coinbase, and it may take some time for the enterprise to recover fully.

With the crypto crash affecting every digital currency company out there, it’s unsurprising that Coinbase would be affected as much as it is given its size. The stock shares of the company initially began selling for nearly $300 each in April when the company first debuted on the stock market, though those shares have since fallen into the $50 range. The company is so tied to bitcoin, that given the asset is dipping into oblivion, it makes sense that the digital currency exchange would be following suit.

On top of that, the crypto arena is losing valuation like it never has before. Since the beginning of the year, the crypto space has lost more than $2 trillion in value. Bitcoin – the world’s number one digital currency by market cap – has lost 70 percent of its value since achieving a new all-time high in November of last year (the asset peaked at $68,000), and other assets such as Ethereum did the same.

Now, with all these coins crashing to the ground, Coinbase was forced to put a hiring freeze in play just a few months ago. 2022 was supposed to be the year in which Coinbase tripled its staff, though these plans didn’t come about. This news was later followed by Coinbase claiming it would lay off about 18 percent of its stash. This meant that not only were people not going to get hired, but many present employees were about to lose their jobs. The situation just got uglier and uglier, and it looks like Coinbase is really feeling the effects.

Mizuho Securities explained in a recent interview:

We worry that the competitive nature of the industry is likely to require further increases in sales and marketing spend over time and can also weigh on Coin’s take rates. All this, coupled with subdued volume trends, is likely to weigh on profitability moving forward in our view.

Problems with the Company Structure?

They continued with:

Their business model is seeing structural issues, suffering from a perfect storm of more competition in a declining market while take rates are perceived to be too high and unsustainable.

Tags: bitcoin, coinbase, Mizuho