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Cathie Wood’s ARK ignores Silvergate, buys Coinbase stock for 6th straight month

ARK appears unfazed by Silvergate as it increases Coinbase exposure by over 700,000 shares in 2023.

Bitcoin (BTC) exchange Coinbase has remained a firm “buy” for ARK Invest throughout its recent price drop.

The latest data shows ARK continuing to buy Coinbase shares despite bankruptcy concerns over  Silvergate Bank — a major Coinbase partner.

ARK ETF keeps topping up on Coinbase stock

In the latest demonstration of its fearless approach to the crypto space, ARK purchased another 47,568 shares of Coinbase on March 7.

This adds to the roughly 6 million shares already held in ARK’s ARKK exchange-traded fund (ETF) at the start of the month, and is already its third purchase of the week.

Coinbase has been under pressure since the start of February, dropping from local highs of $87.50 to current levels of $61.69 — a decrease of almost 30% in just over a month, according to data from TradingView.

COIN/USD 1-day candle chart (Nasdaq). Source: TradingView

While Silvergate precipitated fresh scrutiny regarding crypto exchanges in particular, events have not fazed ARK and its CEO Cathie Wood, known for bucking the trend and increasing exposure to assets such as Coinbase, even during the 2022 bear market.

In a recent edition of its weekly newsletter released on Feb. 27, ARK hinted at its rationale, voicing excitement at Coinbase announcing its Ethereum layer-2 network, Base.

“In our view, Coinbase’s decision to build and integrate its services into a decentralized crypto infrastructure highlights its deep alignment with the fair, transparent, and accessible financial services that public blockchains aim to offer,” it wrote.

“While it will not derive transaction revenue from Base at launch, Coinbase is likely to benefit financially if its Wallet serves as a trusted on-ramp and access point to applications on the network as it scales.”

ARKK COIN holdings chart. Source: Cathie’s Ark

The buy-ins have come at a price — the firm’s cost basis is currently at $254 per share, far in excess of its current value.

GBTC inches higher as Bitcoin ETF battle hits court

Also benefiting this week is the largest Bitcoin institutional investment vehicle, the Grayscale Bitcoin Trust (GBTC).

Related: GBTC approval could return a ‘couple billion dollars’ to investors: Grayscale CEO

Amid crunchtime for owner Grayscale in its long-running battle to convert and launch GBTC as an ETF in the United States, the trust saw a modest uptick in value as the week began.

A court is currently deciding whether U.S. regulator, the Securities and Exchange Commission, has the right to continue denying the launch of the market’s first Bitcoin spot price ETF.

GBTC remains near a record discount to the Bitcoin spot price, with its shares trading at an implied price nearly 50% lower than BTC/USD, per data from monitoring resource Coinglass.

As ever with the ETF narrative, criticism remained.

“GBTC spot ETF approval would dump the price of BTC and pump the ETF,” statistician Willy Woo argued on March 8.

“The pent up sell pressure on GBTC which accumulated during the bear market (as reflected in the GBTC discount) would be released onto the open market.”

GBTC premium vs. asset holdings vs. BTC/USD chart. Source: Coinglass

ARK meanwhile owns 5.53 million GBTC shares, having most recently increased exposure in November 2022, immediately after the FTX debacle broke. In January, it reduced its holdings by 500,000 shares.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Silvergate stock plunges 31% after delayed filing raises doubts over future

Crypto-friendly bank Silvergate has delayed filing its 10-K, an annual report on the financial health of the company. The news has sent its stock price down 31%.

Silvergate Bank has announced that it will delay the filing of its annual 10-K report, which has sent its stock price down over 30% after hours.

A 10-K report is a document required by the Securities and Exchange Commission that provides a comprehensive overview of a company’s business and financial condition. The crypto bank stated that it would need an additional two weeks to complete the report for the 2022 fiscal year.

Silvergate explained in its late filing notice that it sold additional debt securities in January and February and expects to record further losses in the coming months.

“These additional losses will negatively impact the regulatory capital ratios of the Company and the Company’s wholly owned subsidiary, Silvergate Bank (the “Bank”), and could result in the Company and the Bank being less than well-capitalized,” the firm stated in its late-notice filing.

“In addition, the Company is evaluating the impact that these subsequent events have on its ability to continue as a going concern for the twelve months following the issuance of its financial statements,” said Silvergate, adding: 

“The Company is currently in the process of reevaluating its businesses and strategies in light of the business and regulatory challenges it currently faces.”

The crypto bank added that it’s in the process of conducting additional procedures and providing documentation, as requested by its independent registered public accounting firm, to complete a series of audits.

Silvergate explained that a number of factors could have an impact on the financial health of the firm in the near future.

Among those include the substantial market volatility experienced in Q4 2022, several high-profile bankruptcies in 2022 which has disrupted investor confidence in cryptocurrencies and stricter regulatory oversight on banks offering digital asset services.

The firm added that customer retention may be an issue, in addition to any potential liabilities or restrictions of the company that may be brought about by litigation.

Cointelegraph reached out to Silvergate for comment but did not receive a response at the time of publication.

Bitcoin’s 60% year-to-date correction looks bad, but many stocks have dropped by even more

Legacy investors often say BTC, ETH and altcoin volatility is too high to warrant a sound investment, but many major corporations have seen even larger drawdowns in their stock prices in 2022.

Bitcoin’s (BTC) and Ether’s (ETH) agonizing 60% and 66% respective drops in price are drawing a lot of criticism from crypto critics and perhaps this is deserved, but there are also plenty of stocks with similar, if not worse, performances. 

The sharp volatility witnessed in crypto prices is partially driven by major centralized yield and lending platforms becoming insolvent, Three Arrows Capital’s bankruptcy and a handful of exchanges and mining pools facing liquidity issues.

For cryptocurrencies, 2022 has definitely not been a good year, and even Tesla sold 75% of its Bitcoin holdings in Q2 at a loss. The quasi-trillion dollar company still holds a $218 million position, but the news certainly did not help investors’ perception of Bitcoin’s corporate adoption.

Cryptocurrencies are not the only assets impacted by central banks withdrawing stimulus measures and increasing interest rates. A handful of multi-billion dollar companies around the globe have also suffered, with losses that surpass 85% in 2022 alone.

Cash hungry companies saw steep declines in their stock price

Unlike cryptocurrencies, companies, especially those listed on stock markets, rely on financing — whether the cash is used for mergers and acquisitions or day-to-day operations. That is why interest rates set by central banks dramatically impact debt-intensive sectors such as energy, auto sales and technology.

Saipem (SPM.MI), an Italy-based oil and gas engineering and exploration service provider for offshore and onshore projects, saw its shares decline by 99.4% in 2022. The company had severe losses amounting to over one-third of its equity in 2021 and it desperately needed cash to stay afloat as capital costs mounted as interest rates increased.

Uniper (UN01.DE), a German energy company with over 10,000 employees, faced severe impairments after its Nord Stream 2 gas pipeline project was suspended, forcing a 15 billion euro rescue in July 2022. However, as energy prices continued to soar, Uniper could not meet its contracts and was nationalized by the German government in September 2022. The result was a 91.7% drawdown in the stock year-to-date, down from a $14.5 billion valuation.

Cazoo Group Ltd (CZOO) currently holds a $466 million market capitalization, but the car retailer was valued at $4.55 billion by the end of 2021, a 90% loss. Nevertheless, the United Kingdom-based company thrived during the restrictions imposed during lockdowns by offering a way to trade and rent automobiles online. Similarly, U.S. auto retailer Carvana (CVNA) saw an 87% decline in its share price.

Biotech companies I-Mab (IMAB) and Kodiak Sciences (KOD) lost 90% of their value in 2022. China-based I-Mab saw its stock sharply correct after its partner AbbVie halted its cancer treatment drug trial. Previously, the biotech company was eligible to receive up to $1.74 billion in success-based payments. North-American Kodiak Sciences also faced a similar fate after its lead drug failed in the Phase 3 clinical trial.

The tech sector relies on growth, which did not happen

Software services was another sector deeply affected by the lower growth and increased hiring costs. For example, China-based Kingsoft Cloud Holdings (KC), a cloud service provider, presented a net loss of $533 million in the Q1 of 2022, followed by an even larger deficit over the following three months at $803 million. Consequently, its shares traded down 87.6% year-to-date until Sept. 22.

Other examples in the tech sector include Tuya Inc. (TUYA), an artificial intelligence and Internet of Things service provider. The company’s shares plunged by 83.7% in 2022 despite a successful raise of $915 million in March, as the Q2 revenue declined by 27% from the previous year. Tuya also accumulated $187.5 million of losses over the past 12 months.

A handful of other tech companies saw 80% or more extensive corrections in 2022, including Cardlytics (CDLX), Bandwidth (BAND), Matterport (MTTR) and Zhihu (ZH). Every single one of those examples had $1.5 billion or larger market capitalization by the end of 2021, so those losses are not to be dismissed.

There is no sugarcoating Bitcoin’s lackluster performance, especially considering that many thought its digital scarcity would be enough to withstand a turbulent year. Still, one cannot say the stock market has fared much better, adjusting to the historical volatility and gains in 2021.

Consequently, the volatility and sharp corrections are not exclusive to the sector, and investors cannot simply dismiss digital assets because of a 60% or 70% drop in 2022.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

MicroStrategy stock MSTR hits 3-month high after CEO’s exit

Poor earnings coupled with overvalued fundamental metrics pose long-term bearish risks for MSTR.

MicroStrategy (MSTR) stock opened higher on Aug. 3 as investors digested the news of its CEO Michael Saylor’s exit after a depressive quarterly earnings report.

Microstrategy stock up 142% since May lows 

On the daily chart, MSTR’s price surged by nearly 14.5% to $324.55 per share, the highest level since May 6.

The stock’s intraday gains came as a part of a broader recovery that started on May 12 at $134. Since then, MSTR has grown by 142% versus Nasdaq’s 26.81% gains in the same period.

MSTR daily price chart. Source: TradingView

Bad Q2, Saylor’s resignation

The Aug. 3 MSTR rally came a day after MicroStrategy reported a billion dollar loss in its second quarter (Q2) earnings call. Interestingly, the company’s major Bitcoin exposure was a large reason for its poor quarterly performance.

To recap: MicroStrategy is an information technology firm that provides business intelligence, mobile software and cloud-based services. But one of its primary corporate strategies is to invest in Bitcoin to hold it long-term.

Unfortunately, holding Bitcoin has cost MicroStrategy an impairment loss of $917.84 million from its 129,698 BTC holdings in Q2, primarily due to the crypto’s 50% year-to-date (YTD) price drop. In comparison, MSTR plunged 42% in the same period.

BTC/USD daily price chart. Source: TradingView

Furthermore, MicroStrategy’s revenue fell 2.6% year-over-year to $122.07 million. The net quarterly losses prompted Saylor—who has strongly backed the Bitcoin investment strategy since August 2020—to quit as the firm’s CEO and become an executive chairman.

MSTR responded positively to Saylor’s resignation and the appointment of Phong Le, president of MicroStrategy, as his replacement, suggesting that investors are comfortable with the change in leadership.

What’s next for MSTR?

MSTR’s course for the remainder of 2022 depends largely on Bitcoin’s performance, given their consistently positive correlation in recent years. But several metrics are hinting at a correction ahead. 

The weekly correlation coefficient between MSTR and BTC/USD. Source: TradingView

For instance, MicroStrategy’s enterprise value-to-revenue (EV/R) ratio was at 10.76 on Aug. 3, or in “overvalued” territory.

Similarly, MSTR’s forward price-to-earnings (P/E) ratio has reached 54.95, more than double the market average of 20–25. In other words, the market expects MicroStrategy to show enormous future earnings growth despite its underperformance in recent quarters.

MicroStrategy also has amassed $2.4 billion in long-term debts with $46.6 million in interest expenses. Therefore, the company could find it unable to meet its debt obligations if it continues to suffer losses at the current pace.

MSTR long-term debt table. Source: S&P Capital IQ

In other words, MicroStrategy could pledge its nearly $2 billion worth of Bitcoin holdings as collateral or sell them to raise capital. 

Related: A brief history of Bitcoin crashes and bear markets: 2009–2022

“Nonetheless, crypto and MSTR bulls may remain invested,” noted Juxtaposed Ideas, a Seeking Alpha contributor, in its latest analysis, saying that most are willing to “gamble on Bitcoin’s eventual recovery to $40,000” or beyond by 2023 or 2024.

“That would be a positive catalyst for its future stock recovery, returning some much-needed capital to the highly volatile investment.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Coinbase stock (COIN) in danger of another 60% crash by September — Here’s why

COIN could tumble to $21 in the next few months amid Coinbase’s insider trading allegations and weak technicals.

Coinbase (COIN) stock bounced by 4.35% to $57 on July 27 after shedding roughly 20% over the past week. But more downside is likely despite the release of Coinbase’s first installment of the Bored Ape Yacht Club-featured movie called The Degen Trilogy.

Bad news stalls COIN’s rally

Overall, COIN is down roughly 83% since its Nasdaq debut in April 2021 with more losses possible due to weak fundamentals and bearish technicals.

To recap, COIN reached $79 on July 20, five days after breaking out of its “ascending triangle” pattern. As a rule, COIN’s profit target was supposed to be around $120, up over 130% from July 27’s price.

Nonetheless, the stock’s bullish reversal stopped midway after reaching $79, mired by back-to-back negative pieces of news. 

Initially, COIN’s correction began in the wake of a broader retreat in the crypto market, led by Bitcoin (BTC). Then, the downside move picked up momentum after U.S. authorities arrested a former Coinbase manager on “insider trading” allegations.

COIN daily price chart. Source: TradingView

But the biggest selloff during this correction came on July 26 after Bloomberg reported that the U.S. Securities and Exchange Commission is investigating Coinbase for listing unregistered securities.

In response, Cathie Wood’s ARK Investment Management sold over 1.4 million out of nearly 9 million Coinbase shares.

COIN dropped by over 21% to close July 26 at $52.93 while testing the ascending triangle’s upper trendline as support. In the process, COIN wiped out its entire bullish reversal breakout move.

Bearish continuation setup returns

Ascending triangles are typically continuation patterns. Therefore, COIN risks facing more losses in the coming days if it moves back inside its ascending triangle range.

Related: IMF global outlook suggests dark clouds ahead for crypto

On the daily chart, a drop below the triangle’s upper trendline could have COIN test the lower trendline near $45 for a breakdown.

Ideally, such a bearish move will push the stock toward the level at length equal to the maximum distance between the triangle’s upper and lower trendline.

COIN daily price chart featuring ascending triangle breakdown setup. Source: TradingView

In other words, COIN stock price could decline toward $21 by September, almost 60% lower than July 27’s price.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Coinbase stock has potential to double in 2022 after plunging 90% from record high

COIN stock can rally to $160 by the end of the year, a mix of technical and fundamental indicators suggest.

Coinbase stock (COIN) price has nearly doubled since its June lows with a potential for much more upside this year, according to a mix of technical and fundamental indicators.

COIN’s symmetrical triangle reversal

COIN has been undergoing a strong bullish reversal after falling by almost 90% from its record high of $368.90 in November 2021.

Coinbase stock price was up over 95% to $75.27 as of July 20’s close when measured from its May 12 local bottom of $40.83. Its recovery led to a symmetrical triangle pattern formation with the price forming a sequence of lower highs and higher lows.

Symmetrical triangles in downtrend typically turn out to be bearish continuation patterns. They resolve after the price breaks below their lower trendlines to fall further. But in rare instances, a symmetrical triangle could form at the end of a downtrend, leading to sharp bullish reversals.

As it seems, COIN has already entered the breakout stage of its symmetrical triangle reversal pattern. Notably, Coinbase stock closed above the structure’s upper trendline on June 28 while accompanying a rise in trading volume, as shown below.

COIN daily price chart featuring symmetrical triangle reversal setup. Source: TradingView

COIN now tests $80 as its interim resistance while eyeing a further upside toward $135. The profit target is measured after calculating the maximum distance between the symmetrical triangle’s upper and lower trendline and adding the outcome to the breakout point.  

The triangle’s upside target appears closer to COIN’s 200-day exponential moving average (200-day EMA; the blue wave in the chart above) near $153. That psychologically raises the possibility of COIN forming bullish wicks toward $153 if it reaches $135 this year.  

That would mean a 102% rally from July 2’s price.

Coinbase valuation: Q1 earnings

Coinbase Q1 earnings were underwhelming due to weaker-than-expected revenue and a substantial drop in monthly transacting users.

The firm has not disclosed any cost management plans in the said earnings call, but a report published by the Financial Times this June shows that it would cut nearly a fifth of its workforce. Also, Coinbase ended its popular affiliation program in July, according to Business Insider.

“Our target price of [COIN] is around $52 [in 2022],” noted Rumak Research, a group of financial analysts, in their recent Coinbase assessment. The given analysis was based on reactions to past market cycles, coupled with their capital asset pricing model (CAPM), as shown below.

Coinbase valuation based on CAPM model. Source: Rumak Research/Seeking Alpha

The stock’s target price comes to be near $160, according to Rumak Research, when considering the current average market risk premium in the United States of 5.6%.

Related: Coinbase to shut down Coinbase Pro to merge trading services

On similar lines, D.A. Davidson analyst Christopher Brendler noted that Coinbase would survive the crypto bear market despite its “financial situation,” including $3.4 billion in long-term debt. Nevertheless, the company is still sitting on $6.1 billion.

“The fact that they have to scale back a little bit, it may not be the best news, but ultimately, I know that they’re not going to be in a situation where they’re struggling to survive,” Brendler told Forbes, adding:

“They have been through it before and I’m confident they’ll be able to get through it again.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin price limps under $20K as Asia extends global stocks weakness

No let-up in risk assets means Bitcoin faces more selling pressure, but hope remains that a key moving average could soon see a challenge.

Bitcoin (BTC) returned under $20,000 on June 29 as analysts stayed hopeful of a trip higher.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Traders looks to $19,500 for support

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it crossed below the $20,000 mark for the first time in nearly a week in Asian trading hours.

The weakness followed rangebound behavior near $21,000, this characterizing a market still in tune with moves in global equities.

The S&P 500 had finished its previous session down 2%, while the Nasdaq Composite Index lost 3%. On the day, Hong Kong’s Hang Seng was likewise 2.1% lower, while China’s Shanghai Composite Index traded down 1.4%.

With few bullish cues coming from macro, Bitcoin thus had little stopping it from revisiting the lower end of a range in place for several weeks.

“Bitcoin is giving that correction, was anticipating a potential low at $20.3K,” Cointelegraph contributor Michaël van de Poppe wrote in part of his latest Bitcoin-focused Twitter update.

“We get $20.1K as that’s the second important one… Would like to see it hold here and see additional confirmation on LTF. If it doesn’t, $19.3-19.5K next for support.”

Zooming out, other sources were still optimistic about the potential for an assault on resistance further up.

For on-chain analytics resource Material Indicators, this could still come in the form of challenging the 200-week moving average, a key bear market support level, which had begun to function as resistance in June.

Stocks continue downhill

Focusing on macro, commentators argued that with little certainty about economic strength available, risk assets such as crypto would continue to suffer on longer timeframes.

Related: 3 charts showing this Bitcoin price drop is unlike summer 2021

The mood followed a prediction from Big Short investor Michael J. Burry that the U.S. Federal Reserve would abandon its inflation-busting quantitative tightening (QT) policy in 2022 and return to more accommodative conditions.

“Deflationary pulses from this- -> disinflation in CPI later this year –> Fed reverses itself on rates and QT –> Cycles,” part of a tweet published June 27 reads.

Only a clear boon for risk assets would therefore cut Bitcoin and altcoins some slack, popular Twitter account TXMC Trades responded, this perspective echoing views of various commentators including former BitMEX CEO, Arthur Hayes.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.