Coinbase: Blackrock deal will not bring the crypto platform to the black

The assets of Coinbase, the largest listed US cryptocurrency exchange, is inextricably linked to the price of Bitcoin, the world's largest cryptocurrency. It makes sense that a crash of crypto prices would drop the coin base shares by almost two thirds since the beginning of the year.

This decline includes a rally in the past few days. The news that Coinbase has received a partnership with Blackrock-a wealth manager with a fortune of more than $ 8 trillion-has contributed to increasing the stock value of Coinbase by more than a tenth. Blackrock will integrate coinbase services for his major customers.

If large sums of institutional money flow into cryptos, the prices should continue to recover. But which other big fund wants to invest in Bitcoin now?

The Blackrock deal was probably thought when the crypto prices climbed up. Now Bitcoin is being traded where it was at the end of 2020. The demand has evaporated. In the first quarter, Coinbase revenue fell by 27 percent compared to the previous year. The second quarter could get worse.

Block is another company founded in San Francisco that has attached its car to crypto. It reported a sales decline of 6 percent in the last quarter as a result of falling consumer demand for Bitcoin trading.

The crypto crash is not the only problem of Coinbase. The US Securities & Exchange Commission has charged a former employee for insider trade and explains that some token involved is securities. This classification could impose severe regulatory stress on all digital asset exchanges.

Coinbase won customers by simplifying the trade in the Wild West of digital tokens. Direct list in 2021 contributed to the perceived seriousness. But the business has exceeded itself. The competition through competing platforms such as Binance, which offers lower trade fees, encouraged them to add many more tokens. That pressed the margins.

The US crypto tour is hoping for subscriptions and services in which the income increases. However, this accounts for only 13 percent of the total amount. While the crypto trade volume remains low, the coin base shares will do this too.