Why Coinbase Global, Cipher Mining and Silvergate Capital shares are down today
Several stocks in the crypto industry struggled today, along with the broader stock and crypto markets.
As of 2 p.m. ET, shares of a major crypto exchange Coinbase global (NASDAQ: CURRENCY) had fallen nearly 5%, U.S. stocks Bitcoin-mining company Cipher mining (NASDAQ: CIFR) had fallen more than 10%, and shares of the crypto bank Silvergate Capital (NYSE:IF) traded more than 6% lower.
Stocks and cryptocurrencies continued their volatility today, following a nice rally yesterday afternoon with several of the major benchmarks struggling to exit the gate and into the afternoon.
Investors continue to try to navigate the markets in a climate of intense uncertainty. Russia’s invasion of Ukraine continues, inflation remains high, and the Federal Reserve recently raised its benchmark overnight lending rate, the federal funds rate, in March, which could be the first of many rate hikes this year. The Fed is also expected to start shrinking its massive balance sheet later this year. Additionally, bond yields and oil prices have been high and are also rebounding, giving the market a lot to digest and making any type of momentum difficult to sustain.
Nothing obvious seems to be impacting Silvergate Capital and Cipher Mining today other than general market sentiment. Silvergate announced its earnings results for the first quarter of the year last week, resoundingly beating estimates despite falling crypto trading volume in the first three months of the year.
Meanwhile, Coinbase continues to hit new all-time lows since its IPO about a year ago. The stock has fallen more than 62% since its IPO. Analysts continue to wonder when the stock will bottom.
JP Morgan Analyst Kenneth Worthington recently cut the stock’s price target from $296 to $258, still implying extreme upside, with the stock currently trading around $128 per share. Worthington also cut the bank’s estimates for Coinbase’s first quarter results from a loss of $0.12 to a loss of $0.27, while also cutting estimates for the full year. Slowing crypto trading volume and falling prices are a headwind for Coinbase’s business.
However, not all are down. Owen Lau, executive director of Oppenheimer, recently said Yahoo! Finance that he considers Coinbase “one of the most disruptive companies” and that he doesn’t think the market is pricing in the long-term adoption of crypto.
“If you look at a longer horizon, like three, five, 10 years from this perspective, if you ask me, do I think more or fewer people own their own digital assets or use digital assets? I would say that would be more,” he said.
I agree with Lau that cryptocurrencies are becoming more and more important in everyday life. Right now, it seems to be mostly due to cryptocurrencies as an investment. But there are more companies springing up that will help consumers and businesses use cryptocurrencies for everyday purchases and payment transactions. Stablecoins, digital assets tied to a commodity or fiat currency, are also growing in popularity.
Due to this trend, I am bullish on Coinbase in the long run as it plays a major role in helping people trade cryptocurrencies.
I’m even more bullish on Silvergate Capital, which operates a real-time payment system that better facilitates crypto trading and plays a key role in providing infrastructure for the crypto industry. Silvergate also plans to roll out a US dollar-backed stablecoin, which will make it the only stablecoin to be issued by a highly regulated financial institution.
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Bram Berkowitz owns Bitcoin and Silvergate Capital Corporation. The Motley Fool owns and recommends Bitcoin and Coinbase Global, Inc. The Motley Fool recommends Silvergate Capital Corporation. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.