Coinbase shares declined 6.7%, while Robinhood closed lower by 3.5%
Shares of Coinbase and Robinhood were down Thursday as traders weigh how the approval of bitcoin ETFs in the U.S. could weigh on the crypto trading platforms.
Coinbase shares declined 6.7%, while Robinhood closed lower by 3.5%.
Both stocks accelerated losses after the price of bitcoin dropped from its height. The crypto currency topped $49,000 for the first time since December 2021, but then declined to around $46,000.
On Wednesday, the SEC approved rule changes that allow for the launching of bitcoin exchange-traded funds in the U.S. The news has been long awaited by investors in the crypto space as it is seen as lending more credibility to what has been a volatile industry and asset class.
This is a monumental step for the crypto industry, Coinbase CEO Brian Armstrong told CNBC’s Andrew Ross Sorkin. There are 52 million Americans who have been using crypto over the past decade, and I think they have been waiting for some kind of acknowledgment from the government, and the Securities and Exchange Commission in particular, that this asset class is here to stay — and they finally got that.
There is some concern that the advent of a spot bitcoin Securities and Exchange Commission in the U.S. could put pressure on Coinbase down the road — as it offers investors an easier way to invest in the crypto currency.
We see the impact of a Bitcoin Securities and Exchange Commission as having both positive and risky elements for Coinbase, but given the appreciation of Coinbase’s stock price, we see the risks as more relevant to shareholders, JPMorgan analyst Kenneth Worthington wrote.
On the positive side, we see Coinbase as the custodian of choice for Bitcoin exchange-traded funds, with Coinbase hired as the custodian for 8 of the 11 Bitcoin ETFs approved by the Securities and Exchange Commission in addition to its surveillance sharing agreements, he added. We think the approval of the Bitcoin exchange-traded funds are potentially a lose/lose situation for Coinbase as we see a Bitcoin ETF, if particularly successful, as a competitor to Coinbase.
