Why Is Coinbase (COIN) Stock Falling Again Today?

Crypto exchange platform Coinbase (NASDAQ:COIN) is deep in the red today as yet another casualty of the digital asset selloff. So far, COIN stock is down roughly 18% on an overall dreary day in the market.

Flags of Coinbase and NYSE flying in the wind.
Source: rarrarorro / Shutterstock.com

What should you know about Coinbase lately?

Well, the second-largest crypto exchange by market capitalization is suffering continued losses today. The crypto selloff of this past weekend has now trickled over into financial markets, with several crypto-related assets falling. Specifically, COIN joins the like of Bitcoin (BTC-USD) miner Riot Blockchain (NASDAQ:RIOT) and crypto bank Silvergate (NYSE:SI), which are each down more than 14% at the time of writing.

These losses are likely due to a recent Bitcoin selloff hitting the markets lately. In just the past week, the king crypto has shed 18% of its value. A change of forecast doesn’t appear to be in the cards, either. Today, BTC is trending down about 8%.

Bitcoin is something of a gauge for the overall crypto market. When BTC trends up, so do many related digital assets and  businesses — and, as in this case, vice versa. So, what else do you need to know about COIN stock’s drop today?

COIN Stock Stumbles on Crypto Inflation Fears

Coinbase’s drop may be closely related to the state of broader financial markets. In a period of substantial uncertainty earmarked by global supply concerns, past and future interest rate hikes and rising Treasury yields, growth assets are being abandoned for safer investments.

This transition away from growing companies likely comes as a sell signal to Coinbase and other crypto stocks. Crypto and related assets are valued largely on the basis of future expected growth; as those expectations dull, so do their valuations.

With 10-year Treasury bills continuing to offer greater returns as per their rapidly rising yields, riskier assets have fallen out of style compared to safer investments. While some people have tossed around notions of Bitcoin being a hedge against inflation, the asset has clearly yet to truly manifest that property.

With that said, today was already a bearish day in the markets, with the S&P 500 down 2.7% and the tech-heavy Nasdaq Composite eyeing a more than 3.5% loss.

COIN stock’s troubles may not be entirely market related, however. The exchange is also dealing with conflicts related to recent sanctions levied against Russia by the European Union (EU). In fact, Coinbase recently sent out letters to Russian accounts, warning that they may have their wallets blocked as part of the EU sanctions. This is likely an additional bearish force weighing down on the company.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines


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