The FTX collapse sends shock waves through the stocks and bonds of Coinbase

The shares and bonds of Coinbase were affected by the collapse of FTX, which has awakened new concerns about the prospects for the trading center noted in the USA for cryptocurrencies.

Last month, Coinbase bonds due in 2028 fell by about a tenth in price, with investors demanding an increased return of 14 percent for the purchase of the guilt. The bonds now have a price of 59 cents compared to the dollar, a large discount compared to 93 cents at the beginning of 2022.

"If you consider where the debts are traded, this would indicate that in need," said John McClain, portfolio manager at Brandywine Global Investment Management, which has coin base bonds.

The failure of the 32-billion dollar crypto exchange by Sam Bankman-Fried also shaken the stock base stock assessment, whereby the shares listed on the Nasdaq in the past four weeks collapsed around a fifth and after a small climb on Friday at just under $ 48 each. The Coinbase share, which was traded at almost $ 369 at the height of the crypto bull run last November, has fallen by 81 percent in the previous course.

The direct commitment of Coinbase in FTX is low - according to the company to only 15 million

Moody’s Investors Service described the collapse of FTX as a "loan negative" for Coinbase this week and said that his "implosion" would "change the crypto ecosystem radically, further shake and let doubts [The Industry’s] run perspectives".

The "shock waves", which were triggered by FTX's bankruptcy last month, will make the customer engagement and the commercial volume of Coinbase, forecast Moody’s in his report on Tuesday, and threatened to further weaken the company's profitability.

A spokesman for the stock exchange said that Coinbase was in a "strong position" and added that it had no "significant exposure" towards the latest events.

Coinbase depends to a great extent on the income from the trade that have shrunk because the prices for crypto tokens broke off from an all-time high a year ago. The company from San Francisco announced plans in June to reduce a fifth of its workforce at the time, which corresponds to more than 1,000 employees. In the third quarter, Coinbase recorded a loss of $ 545 million compared to $ 406 million in the previous year.

The prices of popular coins slipped even further after the quick crash of FTX in November, with Bitcoin crashing to a level that was last recorded in December 2020. According to The Block Crypto, the trade volume of the industry was also damped.

The current bond courses from Coinbase reflect "an apathy and a lack of appetite to have everything that has to do with crypto as a fixed -interest investor," said McClain from Bandywine. The shares of other cryptofocussed groups such as the Bitcoin investor Microstrategy and the investment company Galaxy Digital have also fallen in the past few weeks.

"I think there is a great risk of headlines at Coinbase and for asset managers like me, who say: 'If this thing goes wrong, I really don't want my name to be associated with lending to Coinbase'," added McClain.

With a cash stock of around $ 5 billion on September 30th, the group's healthy liquidity should help her to survive the storm despite its recent weak financial results, ”said Fadi Massih, Vice President of the Financial Institute group from Moody’s.

"You have the ability to survive the storm," McClain agreed. "We believe that there are reasons to be interested in debts," he said.

"What we have to see from you now and what we have seen from you are the ability to shake your cost structure aggressively in order to adapt it to the new reality of your business."

COINBASE "should buy every single bond that is possible," said McClain, "given her balance sheet position, given the fact that the leverage effect has decimated its competitors".

"We think [Coinbase] has a very strong cash position and could even benefit from the FTX bankruptcy vendors in the long term," wrote Richard Repetto by Piper Sandler on Friday in a Research Note.

"Nevertheless, we believe that an aggressive dismantling is a prudent step to manage the expenditure and to maintain the shareholder value in a potentially extended 'crypto winter' that could result," he added.

Moody’s added that Coinbase would benefit from being a listed US company, "with a transparent organizational structure and a governance framework". In contrast, many of the offshore competitors of Coinbase have opaque structures and races for more transparency.

The collapse of FTX has left a "market share gap", said Moody’s. In the absence of new enthusiasm for crypto, this hole will "prove to be difficult to fill," he added.