Coinbase on the brink of bankruptcy: Rumors will come true?

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2022-05-17 02:49:35

So what are the details of this incident? What does it mean? I will find out with you guys about CeFi’s current perspective on the crypto market in 30 short sentences.

A disappointing quarter for Coinbase

first. Coinbase announced financial statements with lower business results, according to which the company lost 430 million USD in Q1/2022.

All information about Coinbase’s Q1 2022 financial report you can refer to here.

2. Trading volume, Monthly Transacting Users (MTUs) decreased by 44% and 19% respectively, showing the negative influence of the crypto market as well as the competition of other competitors (Binance US, FTX US, Crypto). .com…) for Coinbase.

3. Coinbase (Ticker: COIN) stock price has accordingly dropped 16% in the trading session on May 10, 2022, and has lost 86% of its value since reaching ATH.

coin dump from ath

4. There are many reasons to explain this: The decline in many aspects (users, transaction volume, revenue from accompanying services) accompanied by competition problems, the Fed raised interest rates, the general decline of the crypto market.

5. When looking at the Revenue Per User metric, you can see the Bearish for Business of Coinbase. Also, a rather interesting Insight can be inferred that Coinbase’s Transaction Revenue Per User has bottomed out (equal to the level during the 2018-19 Crypto winter) ⇒ Looks like a mid-May winter is on the way.

revenue per tx coinbase

6. Not only Coinbase, under the following macroeconomic situation decision of the Fed at the meeting in May 2022the entire stock market also witnessed a decline (especially technology stocks).

nasdaq dump one
The NASDAQ Index lost 33% of its value since ATH

7. Although subject to the same “fate”, there have been a lot of news released to directly attack Coinbase as well as the crypto market such as: Coinbase is likely to go bankrupt, users are likely to lose money. when stored on Coinbase exchange…).

Coinbase’s Reaction

8. Business results declined, but Coinbase remained steadfast in its vision of continuing to build a stronger crypto market, a few moves can be mentioned as:

  • Product development Derivatives: Through acquire FairX, a derivatives exchange (has a license to operate).
  • Accelerate development NFT.
  • Building products that reach crypto users: Interactive services with Dapps, smart contracts, staking, Coinbase Wallet…

9. Regarding the possibility of Coinbase going bankrupt, CEO Brain Armstrong affirmed in a Tweet that currently this risk is not there, warning users about the risk of bankruptcy is just a request from the SEC for listed crypto companies.

brian ceo coinbase

10. In the event of Coinbase bankruptcy, the user (who leaves crypto assets on the exchange) will be treated as an unsecured creditor ⇒ Will be the recipient of the final payment upon Coinbase liquidation of assets (including users’ Tokens placed on the floor).

11. While I’m not very familiar with foreign standard balance sheets, when I look at Coinbase, I still don’t see the risk of bankruptcy here.

balance sheet coinbase

12. Coinbase’s cash and cash equivalents plus USDC after Q1 2022 is $6.3B which is still greater than Coinbase’s total liabilities after deducting Custodial funds due to customers as these are only crypto assets of Coinbase. customers are hosted by Coinbase for them ⇒ Haven’t seen the risk of bankruptcy.

13. However, in the context that the financial market in general and crypto in particular is not very positive (due to macro influences), Coinbase will face extremely difficult quarters in the near future.

What do we see with this event?

14. First it can be seen that, crypto is a very competitive industry, both in Protocols, ecosystems (through Liquidity Mining, Vampire attack …) to companies in the traditional financial market like Coinbase.

15. When IPOinvestors in the CeFi market see Coinbase as an Index that mirrors the crypto market, so the drop in stock prices and earnings projections shows a Bearish view coming from traditional investors.

16. Coinbase’s NFT-focused development orientation shows me that this is a sector that has great demand, especially for the US market, as well as ambition in making NFT more widely available. community.

18. In addition to NFT, services that integrate directly with DeFi also focused on building by Coinbase ⇒ The move for continued support and building a bridge between CeFi and DeFi.

19. To realize this goal, Coinbase has been quite “open” in spending the company’s budget for R&D purposes in terms of technology.

operating expenses

20. Indeed, the disbursed R&D budget is $570M – accounting for the largest proportion of operating costs despite the general market trend not favoring the company’s Business ⇒ A relentless building effort .

21. Another Insight shows the “surrender” of individual investors when I look at the trading volume statistics on Coinbase.

retail out coinbase

22. Accordingly, in Q1 2022, the trading volume of retail investors decreased by 58.2% compared to Q4 2021, while Institutions only recorded a decrease of 36.7%.

22. Besides the above, through this event, I also need to pay more attention to you when reading information on media channels, when Coinbase’s financial statements are released, along with information. About the bankruptcy risk announcement, there have been quite a few “headline” presses giving headlines that mislead readers (Coinbase may go bankrupt, Users may lose money).

23. As I have analyzed above, Coinbase’s bankruptcy risk is not available at this time, so when you read the information you need to learn carefully because often the press can also be used as a source of information. emotional amplifier ⇒ This is very bad in financial markets.

24. Therefore, we need to keep a cool head in the investment process, especially for such a sensitive time as today.

Bear Market and the reset of the chessboard

25. In my view, crypto currently has not attracted a lot of new money from the outside, so it will lead to companies, ecosystems, protocols will enter PvP status to gain market share.

26. Whoever wins will be the focus of the market and the first place to attract money in the next growing season ⇒ The chessboard will be reset.

27. One negative thing in Bear Market is that we can hardly make money but when we think positively, this is a time for us to slow down, reflect on our mistakes in the past, learn new things to best prepare when Uptrend arrives.

28. Another positive thing we can think about during Bear season is that the lower the price, the higher our potential profit will be.

29. And of course not every coin will return to its peak, crypto history has proven over a long period of time only 2 coins have always remained in the Top 10. BTC and ETH ⇒ The remaining 8 names are always changing.

30. Our job will be to find out which will be the next project to enter the Top 10 above, when found, it will most likely be an opportunity for you to change your position.

summary

I hope the article has provided you with many perspectives and insights from Coinbase’s Q1 2022 financial report release event. This is a sensitive time for crypto, so when you refer to the information on the media. media, we need to have objective assessments to understand the nature of the problem.

Besides, despite the difficult period of the market, I still believe in a long-term future. And worthy rewards will come to those who patiently wait for the opportunity.

If you have any questions as well as questions, please leave a comment below to discuss with CHK.

#Coinbase #brink #bankruptcy #Rumors #true

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