Coinbase is experiencing a decline in its shares as a result of recent regulatory action, causing investors to flee. During the past three weeks, company stock has slumped 28.6%.
Though COIN was trading at just over $70 on April 11, it had fallen to $51 by May 2, a 3% decline since the start of the week.
Currently, the stock is down almost 40% from its March 21, 2023 high of $84 as the U.S.’s crackdown on cryptocurrency continues. By comparison, cryptocurrency markets have receded only 8.5% from their 2023 peak.
Following the November 2021 peak of the cryptocurrency bull market, Coinbase shares are down 85% from their all-time high of $343.
This week, Citi Group downgraded shares of the crypto exchange from Buy to Neutral due to the uncertain regulatory environment. Analyst Peter Christiansen noted:
“Until the regulatory ‘rules of the road’ are better established in the U.S., the stock will remain weighed down by this high level of uncertainty.”
Coinbase’s stock began to suffer after receiving a Wells notice from the Securities and Exchange Commission in late March.
Last week, company executives pushed back against the regulator’s threats of legal action, stating that an absence of clear regulations was unhelpful. CEO Brian Armstrong added, «We are prepared to defend that position in court, but it doesn’t have to come to that.»
Further, the firm filed an action in federal court last week to compel the SEC to respond to a July 2022 petition requesting regulatory clarity on cryptocurrency. Though the SEC has ignored the petition, it has continued its enforcement crackdown on cryptocurrency.
Last week, Coinbase faced allegations of insider trading when it was accused of selling millions in stock before a decline in share prices following an earnings report.
Bank Stocks Plunge
Several banks, including PacWest and Western Alliance, saw 20% declines in stock value on May 2 following the U.S. financial regulators’ seizure of First Republic Bank, indicating a worsening American banking crisis.