Coinbase (NASDAQ:COIN) stock is in the doghouse today with shares down roughly 5% this morning. This isn’t necessarily the company’s fault, though. Rather, traders seem to be anxious about the crypto bear market getting even worse. On top of that, fund manager Grayscale is engaged in a battle with the U.S. Securities and Exchange Commission (SEC).
Suffice it to say, this hasn’t been a great week for COIN stock. Earlier this week, Goldman Sachs analyst Will Nance downgraded his rating on shares to a “sell” rating. Th stock took a 10% haircut on Monday as a result.
Today, traders pushed COIN stock down another 10% in the morning, although shares are now down closer to 5%. This move isn’t due to anything company-specific, however. Instead, investors are likely concerned about a couple of indirect ongoing issues.
The primary concern? Bitcoin (BTC-USD) has crumbled from a peak of around $69,000 to less than $20,000 today. Other popular cryptos have followed its lead lower, too. So, without a doubt, many crypto traders are now jumping ship. As collateral damage, they may be divesting their Coinbase shares as well.
Another Problem for COIN Stock
To make matters even worse for COIN stock, Grayscale is embroiled in an ongoing battle with a top U.S. financial regulator. Reportedly, Grayscale filed with the SEC to make its Grayscale Bitcoin Trust (OTCMKTS:GBTC) an exchange-traded fund (ETF). However, on Wednesday, the agency rejected the application.
That’s already bad news for the crypto community, as making GBTC a bona fide ETF would add a greater sense of legitimacy to crypto and the blockchain. Now, the gloves are really coming off. Grayscale is reportedly suing the SEC.
To be more precise, Grayscale has “filed a petition challenging the decision with the U.S. Court of Appeals for District of Columbia Circuit.” Grayscale senior legal strategist Donald Verrilli Jr. says the SEC is “failing to apply consistent treatment to similar investment vehicles, and is therefore acting arbitrarily and capriciously in violation of the Administrative Procedure Act and Securities Exchange Act of 1934.”
Is this problematic for Coinbase in particular? Not directly. But it’s still a source of anxiety for the crypto and blockchain market in general. That’s bad news for COIN stock, which is already dealing with concerns over a possible year-long crypto winter.
On the date of publication, David Moadel 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.
