Shares of Coinbase Global Inc dropped to new lows on May 6 as most Wall Street investors continued to cycle out of high-flying tech stocks. In the meantime, the crypto market reached a record valuation of more than $2.4 trillion.
COIN stock was seen to bottom out at $255.15, where it was in danger of breaking below its $250 reference price on the eve of its public listing on April 14, 2021. After its explosive debut, COIN has taken on a continuous downside trajectory.
The director of research at FBB Capital Partners, Mike Bailey, told Bloomberg that the continuous selloff of Coinbase was mostly as a result of the formation of a “mini-bubble” that is now bursting slowly. He explained:
“We saw a mini-bubble in SPACs, IPOs, crypto, clean-tech, and hyper-growth in late 2021, and early 2021 and many of these asset classes are nursing bad hangovers.”
Nonetheless, Bailey’s opinion that crypto is nursing a ‘bad hangover’ is quite misplaced looking at the relative out-performance of the asset class in 2021. Since January 1, the crypto sector has more than tripled, with the likes of Bitcoin (BTC), Ether (ETH), and many other leading altcoins reaching new all-time highs.
But, crypto does not come without extreme volatility. This market shed hundreds of billions of dollars between April 17 and April 23 as bitcoin dropped to nearly $47,000, a critical support level. A speedy recovery pushed bitcoin back above $50,000 and it eventually surged to reach $56,000 where it currently resides.
COIN’s selloff in recent days represents a similar drop in the technology-heavy Nasdaq Composite Index. This Wall Street benchmark index has recorded five straight declines and is now down in seven of the last eight trading sessions. After it closed at a record high of 14,138.78 on April 26, the Nasdaq Composite has lost over 4%.
On its part, the COIN stock is down by more than 6.5%, even as the general crypto market reached new all-time highs. Will the stock recover or will it continue with its downward trajectory?