Goldman Sachs downgrades Coinbase stock to ‘sell’

June 27, 2022 Coin Telegraph

The United States cryptocurrency exchange has seen its stock price plunge in lockstep with Bitcoin, Ether and the broader digital asset market.

Shares of Coinbase Global Inc. (COIN) have been downgraded by analysts at Goldman Sachs after plunging cryptocurrency prices affected the exchange’s underlying business, underscoring the challenges posed by the bear market.

The reason for the downgrade stems from the “continued downdraft in crypto prices,” Goldman analyst William Nance said in a note that was obtained by Bloomberg. The analyst said Coinbase “will need to make substantial reductions in its cost base in order to stem the resulting cash burn as retail trading activity dries up.”

According to Bloomberg, Coinbase still has 20 buy recommendations, 6 holds and 5 sell ratings as of June 27. Stocks with a buy rating are on analysts’ recommended list. Stocks with hold ratings are expected to perform roughly on par with the broader market and sell recommendations are calls to liquidate an asset.

*Shares of Coinbase have plunged over the past seven months. Source: TradingView.*

Coinbase began trading on the Nasdaq stock exchange in April 2021 and quickly exceeded its pre-listing reference price, eventually reaching $381. At those price levels, COIN had a fully diluted market capitalization of nearly $100 billion. However, since November, COIN has been on a downward spiral, plunging 84% to less than $58 a share. The stock was down 8% on Monday, dragging its market cap below $15 billion.

The selloff in Coinbase stock has occurred in lockstep with plunging crypto prices. Since peaking at around $69,000 in November 2021, Bitcoin (BTC) is down almost 70%.

In addition to its collapsing share price, Coinbase has been forced to lay off around a fifth of its staff and has even gone as far as rescinding job offers. CEO Brian Armstrong said the likelihood of recession could prolong the so-called “crypto winter” and lead to an extended period of adverse market conditions.

As Cointelegraph reported, credit rating agency Moody’s recently downgraded Coinbase’s Corporating Family Rating to Ba3 from Ba2. As Moody’s noted, Coinbase’s revenue model is tied to trading volumes, which have dried up in recent months due to the mass exodus of retail traders.

Report: Goldman Sachs Looks to Buy Distressed Assets From Celsius, Crypto Lender Seeks Restructuring Advice

June 25, 2022 Bitcoin.com

Goldman Sachs Sees Higher US Recession Risk Citing Concerns the Fed Will ‘Respond Forcefully’ to High Inflation

June 22, 2022 Bitcoin.com

Goldman Sachs President Warns of ‘Unprecedented’ Economic Shocks and Tougher Times Ahead

June 5, 2022 Bitcoin.com

Crypto Biz: Helicopter CBDC money rains on Shenzhen, May 26—June 1

June 3, 2022 Coin Telegraph

Apple

China's advanced CBDC strategy sees digital yuan airdropped to thousands of people. Meanwhile, Binance Labs raised $500 million for a new Web3 fund.

China’s pandemic-hit economy needs all the help it can get after a surge in COVID-19 infections triggered mass lockdowns across the country. In an attempt to revive consumption, the southern city of Shenzhen used Beijing’s central bank digital currency, or CBDC, to airdrop free money to local residents. A similar strategy was used in the northern Hebei province, where even more digital yuan was deployed. Think of all the things governments can do when they have full control over fiat money on-ramps.

This week’s Crypto Biz newsletter explores China’s helicopter CBDC strategy, the latest funding news from the world of blockchain and whether Apple is getting closer to integrating nonfungible token (NFT) technology.

Binance Labs’ $500M fund to catalyze crypto, Web3, blockchain adoption

The biggest funding news of the week comes courtesy of Binance Labs, which announced plans to allocate a whopping $500 million to Web3 and blockchain startups. The new funding initiative, launched in partnership with DST Global Partners and Breyer Capital, will focus on incubation as well as early-stage and late-stage growth companies. Such mega-funds are nothing new for crypto. But, it’s interesting that venture capital is pouring even more money into the industry at a time when crypto prices are plummeting. Things aren’t always what they seem on the surface.

What is #Binance Labs?

It’s the venture capital and incubation arm of #Binance that identifies, invests, and empowers viable blockchain entrepreneurs, startups, and communities.

Learn more ⤵️https://t.co/4xl7jm7hRQ
— Binance (@binance) May 30, 2022

Goldman Sachs reportedly eyes crypto derivatives markets with FTX integration

Goldman Sachs’ foray into the crypto market appears to be deepening every week. The latest news is that the United States banking giant wants to onboard some of its derivatives products into FTX.US, one of the leading crypto derivatives exchanges. The reason for this integration, according to financial news outlet Barron’s, is that Goldman wants to offer crypto derivatives products using its own tools. It looks like Goldman’s derivatives customers will be joining retail in getting wrecked during the next major market downturn. Or, perhaps I’m being too negative? Read about liquidation cascades before you decide.

City of Shenzhen airdrops 30M in free digital yuan to stimulate consumer spending

You’ve heard of helicopter money before. Well, the city of Shenzhen is making it a reality by airdropping 30 million digital Chinese yuan (e-CNY) to local residents in an effort to boost consumer spending. To qualify for the airdrop, locals must register with the food delivery app Mietuan Dianping. If selected, they’ll have the ability to spend their digital yuan at more than 15,000 merchant terminals. For better or worse, you’re getting a glimpse into how governments will use central bank digital currencies to achieve macroeconomic objectives. But yes, there are plenty of downsides to CBDCs, too.

Apple’s upcoming developer conference sparks rumors of NFT trading cards

Apple’s upcoming Worldwide Developer Conference, also known as WWDC, has sparked interest from the crypto community amid rumors that the iPhone maker was looking to integrate NFT trading cards — the rumors aren’t unfounded, either. The fanatics over at MacRumors apparently clicked on the Memoji characters being showcased on new Apple devices and software models and discovered three trading card characters available to be claimed. The good news is we won’t have to wait long for the rumors to be either confirmed or squashed as WDCC takes place next week.

Don’t miss it! How does the Fed impact your crypto?

There has been a lot of talk about the Federal Reserve and interest rates over the past few months. After lying to us about inflation, the Fed has been forced to do a complete U-turn on monetary policy to bring down cost pressures. So, whether you like it or not, the cabal of central bankers who meet eight times a year have a major impact on your portfolio — and this includes crypto. In this week’s Market Report, we explain how the Fed is pulling the strings. Click below to watch a full replay of the show.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto delivered directly to your inbox every Thursday.

11% of US insurers invest — or are interested in investing — in crypto

June 2, 2022 Coin Telegraph

CFO

Of the 328 CFOs and CIOs representing around half of the global insurance industry, 6% responded their firm was either already invested or considering an investment into cryptocurrencies.

United States-based insurers are the most interested in cryptocurrency investment according to a Goldman Sachs global survey of 328 chief financial and chief investment officers regarding their firm’s asset allocations and portfolios.

The investment banking giant recently released its annual global insurance investment survey, which included responses regarding cryptocurrencies for the first time, finding that 11% of U.S. insurance firms indicated either an interest in investing or a current investment in crypto.

Speaking on the company’s Exchanges at Goldman Sachs podcast on Tuesday, Goldman Sachs global head of insurance asset management Mike Siegel said he was surprised to get any result:

“We surveyed for the first time on crypto, which I thought would get no respondents, but I was surprised. A good 6% of the industry respondents indicated that they’re either invested in crypto or considering investing in crypto.”

Asia-based insurers were next in line, with 6% interested or currently invested, and European insurers came in at only 1%.

The report found cryptocurrencies were in fifth place for the asset class insurers expect to deliver the highest returns over the next 12 months, with 6% ranking it as their first choice, beating United States and European equities.

Around 2% of firms indicated a current crypto investment, and while it’s a small number of firms indicating investment or interest, Goldman Sachs analysts wrote that this level of interest “is still notable.”

On the podcast, Siegel discussed a follow-up survey conducted of crypto-interested firms to understand their motivation behind purchasing:

“We did some follow-up questions on that, and generally, the companies that are either invested or considering crypto are doing so to understand the market and to understand the infrastructure. But if this becomes a transactable currency, they want to have the ability down the road to denominate policies in crypto and also accept premium in crypto, just like they do in, say, dollars or yen or sterling or euro.”

Only 1% of the total surveyed firms said they would increase their crypto position over the next 12 months; 7% said they would maintain their current position; and 92% said they would not invest in crypto over the next year.

Despite the growing interest, there are still those pessimistic about crypto as 16% said it was an asset class they expected to deliver the lowest returns over the next 12 months. Overall, crypto was the third-lowest ranked asset class on this measure.

Mathew McDermott, the bank’s global head of digital assets, wrote in the report:

“As the crypto market continues to mature, coupled with growing regulatory certainty, a cross-section of institutions are becoming more confident to explore investment opportunities as well as recognizing the disruptive impact of the underlying blockchain technology. I have been positively surprised by the rising adoption by global Asset Managers, who clearly recognize the potential of this market.”

Goldman Sachs reportedly eyes crypto derivatives markets with FTX integration

June 1, 2022 Coin Telegraph

Binance

FTX has sought to integrate brokerage services internally to fulfill trades automatically, however, CFTC has called for greater scrutiny of the demand as it would lead to a monopoly of big players.

Goldman Sachs, one of the leading investment banks in the United States is reportedly trying to onboard some of its derivatives products into FTX.US crypto derivatives offerings.

Goldman Sachs has been in talks with FTX over regulatory and public listing help, and aims to expand into crypto derivatives offering by leveraging some of its own derivatives tools and services, reported Barron’s.

FTX.US, the U.S. subsidiary of global cryptocurrency exchange FTX is currently seeking to offer brokerage services for its derivatives offerings. This would allow the crypto exchange to handle the collateral and margin requirements internally rather than depending on “futures commission merchants” (FCMs). FTX.US president Brett Harrison said:

“We have multiple FCMs already committed to integrating technologically with the exchange. There are several large ones you can probably name.”

The U.S. Commodity Futures Trading Commission (CFTC) has sought public comments on the requested amendment from the crypto exchange. The chief regulatory body also believes that FTX’s proposal warrants scrutiny as it would lead to a monopoly by large investment banks such as Goldman.

According to people familiar with the matter, the integration of Goldman Sachs derivatives services would offer “trading futures directly, introducing clients and acting as an on-ramp to the exchange, or providing capital top-ups for clients.”

FTX has argued that an integrated brokerage model would help in making the market more stable and free. In a recent roundtable discussion with the CFTC, CEO Sam Bankman-Fried fielded several questions about crypto derivatives and FTX’s proposal to integrate its own FCM.

Crypto derivatives trading has been a topic of debate for quite some time, with many European and even the U.S. prohibiting most of the crypto exchanges from offering leveraged trading. Binance had to shut its derivatives offerings in several European countries post regulatory interventions.

On one hand, CFTC has called for greater scrutiny of FTX’s amendment demand, while on the other, FTX argues that an integrated brokerage model would help them calculate calculates margin requirements every 30 seconds, rather than waiting until the next day to liquidate positions.