Where cryptos trade long term is ultimately where the widely followed exchange, Coinbase, will journey to. It released its latest quarterly earnings last week which showed that revenue plummeted 61% as crypto prices dropped, and trading volumes collapsed. Its shares have tanked since its direct listing last year, and questions are being asked about its growing non-cash losses, which were equivalent to 77% of its revenue.
It has not been an easy year for Coinbase, the world’s second largest centralised exchange. Faced with dwindling trading volumes as the popularity of the crypto currency space fell, class action lawsuits after SEC allegations have followed. But it is the volume of trading executed by retail customers which is the lifeblood of the exchange. At $46 billion, this was down more than two-thirds compared with the year before. Contrasted with a weak first quarter even, the exchange’s trading volume was down another 30%, as the company dropped into the red, suffering a $647 million loss.
In spite of the many setbacks the exchange has endured, the company maintained that the downturn was part of a typical cycle in the markets and said its analysis “suggests customer are not leaving the Coinbase platform”. Perhaps the recent announcement of a deal with BlackRock will be “an exciting milestone” for the exchange. Its connection to the asset manager’s Aladdin system should provide BlackRock’s clients with prime brokerage facilities and crypto trading custody. If nothing else, the tie-up is a much-needed confidence booster for Coinbase after a hugely challenging year. Clients of the world’s biggest asset manager will have direct access to crypto with the first token available being bitcoin, though others are expected to come later.
On a technical basis, bitcoin itself has been trying to push above the 100-day simple moving average at $24,609. Just above here lurks the halfway point of the recent May to June price move at $24,975. That is a major psychological level for bulls who are trying to claw back the horror days of selling seen back in June when prices fell sharply down through the $30,000 marker. If buyers can make headway above this zone of resistance, the long-term trendline from the all-time high comes in around $26,750. Support is the next Fib level below (38.2%) at $23,227.