Coinbase co-founder Fred Ehrsam sells $13 million COIN shares as ARK continues to divest

December 12, 2023 Coin Telegraph

Coinbase rolls out crypto transfers via links sent on WhatsApp, Telegram

December 5, 2023 Coin Telegraph

Recipients need to download a Coinbase Wallet to receive the funds, but the crypto exchange says they’ve simplified the process for less tech-savvy users.

A new feature from Coinbase Wallet allows for the transfer of crypto through a link that can be sent through some of the most popular social media sites and messaging apps as the crypto exchange looks to make its service accessible to a wider market.

“Users can now send money on any platform that they can share a link,” Coinbase said in a Dec.

There’s no payment fee when sending USD Coin (USDC), a U.S.

Send money anywhere you can send a link.

Easily. For free.

⤷ https://t.co/CKyLu1wYEw pic.twitter.com/XX9YaZZEPm
— Coinbase Wallet ️ (@CoinbaseWallet) December 5, 2023

Clicking the link will take the recipient to their device’s app store to download Coinbase Wallet — if not already downloaded — where they can create a wallet in one click, Coinbase noted.

If the funds aren’t claimed within two weeks, they will be returned to the sender.

Coinbase also made a “simple mode” for its wallet to help new and less savvy tech users which only shows basic functions like buying, sending, receiving and viewing assets.

Cathie Wood Sells Off Coinbase (COIN) Stock While Picking Up More Robinhood (HOOD) Shares

November 29, 2023 The Daily Hodl

Brian Armstrong Says On-Chain Is the New Online As Coinbase Beats Expectations With $674,148,000 in Revenue

November 5, 2023 The Daily Hodl

What are the 3 assets most correlated with Bitcoin?

August 23, 2023 Coin Telegraph

Analysis

Bitcoin price is closely linked to several financial assets but the reasons for correlation with certain precious metals and stocks can be quite different.

The financial media often points out Bitcoin’s (BTC) correlation to big tech. “Bitcoin is trading like a tech stock” is a common narrative alongside BTC's often acute inverse-relationship with the United States dollar.

But are these correlations set in stone, and can they be useful for predicting future price moves? Let's take a closer look at several reports analyzing the relationship between Bitcoin and various asset types.

Bitcoin's historic correlations vary across timeframes

A report published in October 2022 by the Multidisciplinary Digital Publishing Institute arrived at several key conclusions regarding Bitcoin’s correlations with traditional financial assets, including:

The extreme volatility of the Bitcoin market means that long-term correlations are stronger than short-term correlations;
The “positive linkage between Bitcoin and risk assets increases during extreme shocks” such as COVID-19;
Bitcoin can be positively correlated with risk assets and negatively correlated with the US dollar;
Bitcoin can serve as a hedge against the US dollar.

While some of these points can be countered with newer price data over the last 9 to 10 months, such as a major drop in volatility, insight can still be gained from examining them. In addition, other researchers have gone deeper into the relationship of specific assets to Bitcoin during set timeframes.

Crypto-specific stocks

A few crypto-related equities have been more correlated to Bitcoin than any other assets on the market. The 90-day correlation coefficient for BTC/MSTR, BTC/COIN, and BTC/RIOT have all remained near 1 for the last several months. The symbols "BTC/xxxx" indicate the correlation coefficient for each asset as measured against Bitcoin.

For MSTR, the coefficient has fallen no lower than 0.68 since September 2022. The coefficient for RIOT fell to roughly 0.75 in June 2023, while COIN trended near 0 for a time during May and June.

*COIN, ROIT, and MSTR year-to-date chart with 90-day correlation coefficients compared to BTC. Source: TradingView*

All of these stocks have outperformed Bitcoin so far this year while also showing greater volatility. Investors may be using these assets as proxies for Bitcoin, which can't be bought through a brokerage account.

One reason these three stocks are so closely correlated to Bitcoin has to do with the balance sheet of their respective companies. They all have a substantial amount of Bitcoin holdings.

As seen in the table below, MSTR has the most holdings of any public company with 152,333 Bitcoin. COIN comes in 4th place with 10,766 Bitcoin, and RIOT is in 8th place with 7,094 Bitcoin.

*Bitcoin holdings by public companies. Source: CoinGecko*

Precious metals

When it comes to correlation with commodities and precious metals, in particular, silver actually beats gold in mirroring Bitcoin's price moves since 2019.

A November 2022 report by Jordan Doyle and Urav Soni of the CFA Institute entitled “How do cryptocurrencies correlate with traditional asset classes?” shed some light on Bitcoin's most-correlated assets.

*Crypto and Commodities correlation heat map. Source: CFA Institute*

Silver has been the commodity most closely-correlated to Bitcoin from October 2019 and to October 2022 with a correlation coefficient of 0.26, according to the report. Gold’s correlation, by comparison, was just 0.15, perhaps due to silver’s greater volatility.

The report notes:

Silver has the highest correlation, peaking at 0.26 for silver and bitcoin. Bitcoin, the so-called 'digital gold,' exhibits only weak correlation with the precious metal.

Passive and active equity funds and bonds

When speaking of stocks as a whole and their correlation to Bitcoin, looking at an index or ETF would be the most common way to make a comparison. This provides an overview of the asset class in general rather than zeroing in on one specific stock, which may have any number of factors affecting it.

As might be expected, growth funds tend to be more correlated with cryptocurrencies, presumably due to their more speculative nature. Notably:

“Growth funds exhibit a stronger correlation to cryptocurrencies than value funds. The correlation coefficient between small-cap growth funds and bitcoin, for instance, is 0.41, compared to 0.35 for small-cap value funds and bitcoin.”

*Crypto, equity funds, and bonds correlation heat map. Source: CFA Institute*

In other words, crypto markets as a whole are “weakly sensitive to interest rate dynamics” that were at least partially responsible for a broad drawdown in equities throughout 2022.

Finally, Bonds bear little to no relationship with Bitcoin. Passive bond funds showed a correlation of just 0.11, while active bond funds were just two basis points higher at 0.13. All data points are for the timeframe of October 2019-October 2022.

Bitcoin's correlations are not a crystal ball

Due to Bitcoin’s large price swings, all correlations can change at a moment’s notice. Still, the data used here provides an accurate picture of the assets most closely correlated to Bitcoin in the recent past.

It's likely that crypto-specific stocks will continue having a strong correlation due to their Bitcoin holdings, while the correlation with commodities and equity funds could quickly change course going forward.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Coinbase earnings show the company is now much more than just an exchange

August 4, 2023 Coin Telegraph

broker

The Coinbase earnings report shows that services and subscriptions are the exchanges’ core revenue streams. Is this a positive or a negative?

Coinbase, a leading U.S. cryptocurrency exchange, shared its 2Q results on August 3. Despite showing a net loss, some positives emerged, like a 13% cut in operating expenses from the last quarter and a 3% boost in its cash reserves to $5.5 billion.

*Coinbase key financial metrics, USD million. Source: Coinbase*

However, the exchange took a hit with a $97 million net loss, worse than its previous quarter, and saw a 32% drop in its adjusted EBITDA to $194 million in 2Q.

Services and USDC stablecoin impact growth

One downside was the 7% fall in subscription and service revenue from 1Q. The letter to shareholders revealed that a 28% decrease in the USDC stablecoin market cap partly caused this. Since Coinbase holds a stake in Circle, the USDC's issuer, they gain from the interest rate offered by the stablecoin reserves.

Additionally, customer fiat balances deposited at the exchange serve as another revenue source. But despite these, Coinbase's interest income fell by 16% from the last quarter to $201 million in 2Q.

Even so, the numbers suggest that Coinbase has successfully lessened its dependence on trading fees. Subscription and service revenues matched trading revenues in the first half of 2023, a shift more noticeable when you consider transaction costs consume about 15% of its revenues. This suggests that Coinbase has transitioned from a trading firm to a service broker, prioritizing recurring revenues.

*Coinbase shares, USD (blue, right) vs. Crypto total cap, USD (orange left). Source: TradingView*

Looking at Coinbase's (COIN) share price, there isn't a clear sign of this shift in focus throughout 2023. This suggests that either investors still firmly believe that trading fees will remain the key income driver for the company, or they simply haven't been crunching the numbers as diligently as they should.

It's impossible to accurately predict what direction the cryptocurrency market will take in the next few years, but one can certainly assess Coinbase's potential to ramp up its services and subscription revenues, independent of how trading fees pan out. There are several notable events on the horizon that could significantly cut the exchange’s reliance on trading.

Events on the horizon that could significantly cut the exchange’s reliance on trading

The first is that Tether, the largest stablecoin by market cap, is eventually sued by DOJ and loses its banking partnerships. If the company issuing Tether were to be sued by the Department of Justice (DOJ) and consequently lose its banking partnerships, it could suffer a considerable loss in market cap. This scenario could create a massive opportunity for USDC to swoop in and fill the void. Because Coinbase enjoys revenue from Circle, the issuer of USDC, such a shakeup could potentially multiply Coinbase's service revenue by up to four times.

Second, Binance could be effectively shut down by regulators. Despite its stance as the reigning champion of cryptocurrency exchanges in terms of trading volume, Binance has been attracting attention from regulators worldwide, and not the good kind. If regulatory pressures were to effectively shut down Binance, this could pave the way for Coinbase to seize a substantial increase in market share. The knock-on effect would likely be a significant boost in service revenues for Coinbase.

Third, is the potential launch of Bitcoin spot ETFs in the United States because this could be a game-changer for Coinbase. The company has already entered into surveillance-sharing agreements with ETF issuers, and it's ready to provide custody services. This new avenue would create an additional source of revenue for Coinbase.

Lastly, it's important to remember that while Coinbase's current focus is on cryptocurrency trading and custody services, the company has plans to diversify and expand its product offerings. For instance, it's planning to launch a margin trading platform and a cryptocurrency lending platform. These new products and services have the potential to generate significant revenue from services and subscriptions.

The plan is being executed, but only time will tell if it is a winning strategy

The crypto landscape's volatility clouds judgment on whether Coinbase's pivot to non-trading revenues is the right call. But signs are showing that Coinbase is agile and adaptive, slashing expenses and fortifying its cash chest. They've managed to match subscription revenues with trading revenues, a clear indicator of this adaptability.

The billion-dollar question, however, is whether the investors will acknowledge and reward this shift in revenue generation. Currently, it seems that investors aren't paying adequate attention to Coinbase's strategic revamp but if some of the scenarios mentioned before come to life, they could be in for a pleasant surprise. It's a dynamic space, and this crypto giant seems to be playing its cards strategically.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Cathie Wood Says ARK Invest Bullish on Coinbase After Ripple’s Victory in SEC Lawsuit

July 19, 2023 The Daily Hodl

Cathie Wood’s ARK loads up crypto bags, buys $19.9M Block shares

June 9, 2023 Coin Telegraph

Cathie Wood’s ARK loads up crypto bags, buys .9M Block shares

Ark Invest

Just days after buying $21 million of Coinbase shares, ARK Invest CEO Cathie Wood has added another $19.9 million in Block Inc. shares across its ETFs.

ARK Invest CEO Cathie Wood doesn’t appear to have been swayed by recent crypto regulatory action, buying another $19.9 million shares of Block Inc. right after buying $21 million in Coinbase stock.

Wood’s latest buying spree comes despite the United States Securities and Exchange Commission this week suing two of the industry’s exchange heavyweights, Binance and Coinbase, for offering what the regulator considers to be unregistered securities, among other things.

Coinbase's share price has been depressed in the days following the SEC lawsuit, however, Block Inc.'s shares saw a sharp rise in that same time period.

ARK Invest’s 305,573 new shares of Block came across six buys between June 7-8, which now represents ARK’s fourth largest holding at 4.81%, according to ARK Invest Daily Trades.

Of the new shares, 240,174 were added to its ARK Innovation (ARKK) ETF, 39,099 shares to ARK Next Generation Internet (ARKW) and the remaining 26,300 shares to ARK Fintech Innovation (ARKF).

As for Coinbase, ARK Invest bought 419,324 shares — worth about $21.6 million — across three buys on June 6, which came in the midst of COIN plummeting nearly 20% overnight on June 5.

While many consider the lawsuits to have harmed the crypto firms, Wood recently told Bloomberg that the tougher charges laid against Binance may eventually work in Coinbase’s favor:

“We have Binance under increasing regulatory scrutiny for more criminal activities, fraud being one of them, therefore we have the competition for Coinbase disappearing, so that’s a good thing longer term for Coinbase.”

Coinbase is now ARK Invest’s seventh largest holding at 4.39%, with its total of 11,440 COIN shares spread across its ARKF, ARKK and ARKW ETFs, according to Cathie’s ARK, a website devoted to tracking her portfolio.

Since Q1, ARK Invest has increased the number of COIN shares by 8.2% — which comes on the back of 20.2% and 25.2% increases in Q4 2022 and Q1 this year, according to the website.

Because of regulatory uncertainty, innovation seems to be leaving the US for more friendly regimes. Unfortunate. I believe it will become an election-year issue. https://t.co/PvqK9W27Fd
— Cathie Wood (@CathieDWood) June 4, 2023

While Wood is becoming increasingly bullish on Coinbase, she believes the SEC’s regulation by enforcement approach has taken a toll on cryptocurrency innovators in the U.S.

The tech-savvy CEO is ultra bullish on Bitcoin (BTC) over the long term too.

In the Bloomberg interview, Wood explained that Bitcoin was built to thrive during times of market turbulence and regulatory uncertainty:

“Why would Bitcoin do well in that circumstance? It will do well because it’s an antidote to counterparty risk in the traditional financial system.”

In April 2022, Wood predicted that Bitcoin would reach $1 million by 2030.

Magazine: Hall of Flame: William Clemente III tips Bitcoin will hit six figures toward end of 2024

Moody’s downgrades Coinbase citing ‘uncertain magnitude’ of SEC charges

June 9, 2023 Coin Telegraph

COIN

Meanwhile, financial services firm Berenberg Capital told Cointelegraph that it viewed Coinbase shares as "uninvestable" in the near term.

Credit ratings agency Moody's has downgraded its rating of Coinbase from “stable” to “negative” following the SEC’s legal action against the crypto exchange for allegedly operating as an unregistered securities broker.

In a June 8 statement, Moody's said the downgrade was due to concerns about the impact of the SEC action on Coinbase’s day-to-day operations.

“The change in outlook to negative from stable reflects the uncertain magnitude of impact the SEC’s charges will have on Coinbase’s business model and cash flows.”

Despite the downgrade, Moody's noted that Coinbase maintains a “strong” liquidity position. The rating agency looked favorably on the company’s $5 billion in cash and equivalents compared to its $3.4 billion in long-term debt.

MOODY'S: COINBASE OUTLOOK TO NEGATIVE FROM STABLE.
— Breaking Market News (@financialjuice) June 8, 2023

The firm added that it expects Coinbase to maintain its “focus on expense management” that has successfully mitigated declines in transaction revenue in the past.

Moodys wasn’t alone in adjusting its outlook on Coinbase. While financial services firm Berenberg Capital reiterated its pre-existing “hold” rating to its clients, it slashed its price target for COIN shares from $55 to $39.

In emailed comments to Cointelegraph, Berenberg research analyst Mark Palmer explained that the reduction in the price target reflects their view that Coinbase could see its already-weak Q2 trading volumes “persist and intensify” as a result of the SEC’s charges, explaining:

"Given the potentially significant impact of the lawsuit's outcome on COIN's U.S. operations, we would expect some investors to reduce their exposure to its platform."

Additionally, Palmer noted the SEC's “desired remedy” would require the complete wind-down of COIN's core business practices, namely its staking services. As such, Palmer advised that investors should hold off on pursuing any investment in Coinbase shares in the short term.

“We view COIN shares as uninvestable in the near term.”

While Palmer says Coinbase is uninvestable, ARK Invest CEO Cathie Wood doesn’t seem too worried. In an interview with Bloomberg, Wood said the increasing regulatory scrutiny of competitor crypto exchange Binance was ultimately a good thing for Coinbase in the long run.

“They're very different.”

Ark Invest CEO Cathie Wood says SEC seems to muddle the allegations against Coinbase and Binance https://t.co/nCvEp4jdfV pic.twitter.com/icbeIuLs1C
— Bloomberg Markets (@markets) June 8, 2023

At the time of publication, Wood’s ARK Invest is the world’s fourth-largest holder of Coinbase shares and it shows no sign of giving up that title anytime soon. On June 7, the investment firm purchased an additional $21.6 million worth of COIN shares.

Coinbase shares have plummeted 15.7% since the beginning of the week, and are currently changings hands for $54.90 apiece, according to data from Google Finance.

Magazine: Bitcoin is on a collision course with ‘Net Zero’ promises

Cathie Wood’s Ark Invest Aggressively Buys Coinbase Stock After SEC Lawsuit Hits Price

June 7, 2023 The Daily Hodl