FTX and hedge fund Alameda Research blowing up is probably the biggest non-economy financial story since COVID. A major crypto player goes kaboom basically overnight with billions and billions of dollars just disappearing – poof, presto-change-o.
Unfortunately for other crypto exchanges, they are guilty by association in Wall Street’s eyes. Let’s look at Coinbase Global, Inc. (COIN) as an example.
Coinbase provides financial infrastructure and technology for the cryptoeconomy in the United States and internationally. The company offers the primary financial account in the cryptoeconomy for retailers; a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable ecosystem partners to build crypto-based applications and securely accept crypto assets as payment.
COIN list more than 12% on Wednesday and is heading towards major support and potential price vulnerability. Just a year ago, Coinbase shares were $300 higher than where they are today. In August, they were above $100 and in the $60-$70s since.
As we type, COIN trades at $48.83, just $8 above its 52-week and all-time low. If COIN crosses and closes below $40, there is no technical support safety net below. It’s never traded down there before and could freefall. Considering the abrupt bankruptcy of FTX, willing buyers could be difficult to find as nobody would have a feeling of “how low can it go.”
Like many previous storms, the FTX clouds will pass, and the sun will shine on the crypto players left standing. In our opinion, COIN storm chasing could be a dangerous idea.