What happened
A strong bull run that's lasted all week came to a screeching halt on Thursday as crypto values fell and pulled Coinbase Global (COIN 3.78%) down with them. Some of the move was simply trading volatility, while some was because of very real concerns about the health of the market.
Shares of Coinbase dropped as much as 6.6% today and were down 2.9% at 3 p.m. ET. Solana (SOL 4.75%) fell as much as 10.1% in the past 24 hours and is currently down 1.8%, while Cardano (ADA 5.56%) fell as much as 7.3% and is currently down 4.1%.
CRYPTO: SOL
Key Data Points
So what
The biggest news out of crypto was Blockchain.com announcing it will cut staff by 25%. The company said it will close an office in Argentina, cancel expansion plans in other countries, and cut back institutional lending. It hasn't been widely reported, but Blockchain.com had lent $270 million to Three Arrows Capital, and when the company filed for bankruptcy, it exacerbated an already down market.
Funds Blockchain.com raised earlier this year are expected to keep the company solvent for the foreseeable future, but there was a need to cut back expenses dramatically. With customers' funds being frozen at some exchanges, it wouldn't be surprising if the company also loses customers as a result.
Another big story was an insider at Coinbase and two related people being charged with insider trading in relation to trades made ahead of tokens being listed on Coinbase. The U.S. Department of Justice made the announcement this morning, and Coinbase has been cooperating for months on the investigation. At the very least, this is a black eye for the company.
NASDAQ: COIN
Key Data Points
The broader crypto sell-off seems to be simply taking a breather from a relatively hot week of trading. Some cryptocurrencies are up over 50% in just a few weeks, and naturally there can be a pullback when that happens.
Now what
As fast as the crypto industry moves, we continue to see fallout from the Three Arrows Capital collapse, and Blockchain.com is the latest victim. This may ultimately be good news as companies eventually take fewer risks and focus on their core businesses. Coinbase said earlier this week that it wasn't impacted significantly by recent bankruptcy filings and hasn't taken any losses on loans.
I would expect more volatility for tokens and crypto stocks, but the companies that survive are well positioned to generate tremendous value for shareholders. Coinbase is currently proving that a conservative business model with a long-term vision is better than taking risks no one in crypto fully understood.
