By
Bena Ilyas
April 18th, 2024
Coinbase shares are up approximately 67 percent YTD, despite a 62 percent decline last year.
Coinbase Global Inc (NASDAQ: COIN) enjoyed a spike in market confidence, and the traditional banking sector proved risky to most investors. According to the latest stock market data from TradingView and MarketWatch, COIN shares closed Monday trading at $59.17, up 10.17 percent from the day’s opening price. The COIN rally continued during the after-hours trading session, up approximately 2 percent. Coinbase managed to maneuver the weekend banking crisis, which saw two major banks fail at proximity.
Coinbase and the Banking Crisis
Silicon Valley Bank and Signature Bank were closed by relevant authorities, thus, the total number of American banks that failed this year is three. Notably, Silvergate Capital Corp (NYSE: SI) previously closed its crypto business operations, thereby leaving most crypto businesses without fiat on/off-ramp services.
Late last week, Coinbase announced that it had stopped processing fiat payments from Silvergate Capital amid rumors of insolvency. However, the company indicated that users’ cash is safe and available for withdrawals.
Update: We’re sorry to see Silvergate make the tough decision to wind down their operations. They were a partner & contributors to the growth of the cryptoeconomy. Coinbase has no client or corporate cash at Silvergate. Client funds continue to be safe, accessible & available. https://t.co/78oMrLQ6VH
— Coinbase (@coinbase) March 9, 2023
As the weekend crypto volatility kicked in, which saw Bitcoin retest $19K, Coinbase announced a temporary pause of USDC:USD conversion. Furthermore, Silicon Valley Bank and Signature Bank closed, and Coinbase was heavily exposed despite not reporting.
“We are temporarily pausing USDC:USD conversions over the weekend while banks are closed. During periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours. When banks open on Monday, we plan to re-commence conversions,” the company noted.
Come Monday, Coinbase announced a $240 million corporate exposure in Signature Bank. However, the company was saved from a huge paperwork process, after the United States Federal government announced a $25 billion bailout of Silicon Valley Bank and Signature Bank to make depositors whole.
USDC:USD conversions have been reinstated and are now operating as normal via API and UI. USDC will not be auto-converted to USD on Coinbase Exchange.
— Coinbase (@coinbase) March 13, 2023
As a result, Coinbase reopened its USDC:USD conversion following the Fed’s bailout that prevented further crypto bleeding. Moreover, Circle’s USDC was at risk of depegging like Terra Luna UST last year, which saw billions of dollars wiped out from the crypto market.
Market Outlook
As a leading cryptocurrency exchange, Coinbase shares have been moving along with Bitcoin’s volatility. While Bitcoin price gained as much as 7 percent on Monday, Coinbase shares closed the day up 10 percent. As a result, Coinbase shares are up approximately 67 percent YTD, despite a 62 percent decline last year.
Coinbase Global has a reported market capitalization of approximately $12.13 billion and 178.85 million shares outstanding. Having been rated 28 times, COIN shares received an average recommendation of HOLD and an average price target of $63.38.