Coinbase Stock Drops by 20% as Bitcoin Price Wavers

The year 2024 starts on a roller coaster for Coinbase. In just a few days, the American crypto exchange giant saw its stock plummet by nearly 20%, dragged down by the violent fluctuations of bitcoin.

Coinbase Down 20% with the Bitcoin Drop

Coinbase reached an annual peak of $187 per share at the end of December, only to plunge to about $150 on January 4th. This drop reflects the chaotic movements of bitcoin, whose price briefly rose above $46,000 on Tuesday before falling back under $43,000 the next day.

The much-anticipated approval of bitcoin spot ETFs by the SEC is generating a lot of anticipation. These eagerly awaited index funds could trigger a massive influx of institutional capital into the crypto ecosystem. 

While this approval seems to be only a matter of time for many experts, its timing continues to shake the markets. When will the SEC finally give the green light? Before January 10th, as predicted by TD Cowen bank? Difficult to say.

This climate of uncertainty weighs on the entire cryptocurrency sector, including Coinbase. Despite strong fundamentals with a market capitalization of $36 billion, the company has even faced sell-offs by investors like Ark Invest, which has liquidated $200 million worth of shares in recent weeks.

The Sector in Wait-and-See Mode

The SEC’s green light for Bitcoin spot ETFs would represent a decisive turning point. By paving the way for index investments backed by bitcoin, it would greatly facilitate the allocation of this asset by the traditional institutional market. Heavyweights like BlackRock are already poised to launch their own funds.

Thanks to its robust digital asset custody and exchange infrastructures, Coinbase has the means to assert itself as the platform of choice for the entry of traditional investors into the crypto world.

Even as its shares go through a turbulent zone with cryptocurrency prices, Coinbase remains a central name in this rapidly expanding ecosystem. In the long term, the increasing adoption of digital currencies among traditional investors is seen as an important growth catalyst.

So, beneath its cyclical fluctuations lies a significant structural growth potential, directly related to the prospects of bitcoin democratization. A favorable regulation by the SEC would signal the start of an unprecedented influx of traditional investors.