Key Crypto Exchange Struggles as Values Plunge

Coinbase, the most popular U.S. cryptocurrency exchange, is facing turmoil in the wake of a plunge in currency valuations. Since the beginning of the year, there has been a decline in trading volume, mainly among the biggest institutional market holders, and shares have fallen by 75% amid weak earnings and lower trading volume. Despite growth in retail investor numbers over the same period, big money interests have lost ground.

The company's shares are extremely volatile as it struggles to regain a foothold in the crypto industry. As of Sept. 6, shares had closed negative 13 out of 15 days. Sept. 7 saw the stock rebound by 8.7% amid a broad market upswing. Coinbase's New Issue Due to the drop in interest in owning and trading cryptocurrencies such as bitcoin and ethereum, Coinbase faces a new challenge. During the second quarter, Coinbase's earnings and trading volume declined. Bitcoin traded below $19,000 on Wednesday as crypto valuation assessments fell below $1 trillion for the broader virtual currency market.

Competition Challenges Coinbase

Due to the elimination of trading fees for day-today bitcoin transactions by Binance U.S., other investors are choosing to trade at exchanges that do not require strict KYC rules, preferring to trade anonymously. These problems for Coinbase are bringing more challenges than ever before.

By eliminating its previous fee of 0.1% on most transactions, Binance, an arm of the world's largest digital currency exchange, allows investors to trade bitcoins, the largest cryptocurrency by value, for free against U.S. dollars, Tether, and other dollarbacked stablecoins.

Shares of Coinbase have suffered because a liquidity crisis has impacted several large and prominent lenders like Voyager Digital, Celsius Network, Babel Finance, and BlockFi.

Some institutional investors have closed their positions in crypto and are sitting on the sidelines. Others seem to have lost interest completely, while others may return. Coinbase has laid off 1,100 employees since June as part of its effort to lower costs. —Crypto Weekly