Bitcoin and cryptocurrency prices have been on a roller coaster this year, crashing back after an April peak (subscribe now to Forbes’ CryptoAsset & Blockchain Advisor and discover crypto blockbusters poised for 1,000% gains).
The bitcoin price rally coincided with the Nasdaq-debut of major U.S. crypto exchange Coinbase, helping drive attention to the stock but failing to prevent it from falling along with the bitcoin price since April.
Now, ahead of Coinbase’s closely-watched second-quarter earnings report being released tomorrow, analysts at Wall Street giant Goldman Sachs have reiterated their “buy” rating for Coinbase—predicting even a lower bitcoin price could be good for its earnings.
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“Significantly elevated crypto asset volatility” caused a trading boom that will mean Coinbase takes in more in fees, the note to clients read. It was first reported by Coindesk. Analysts went on to predict the company could post earnings above market expectations as a result.
Goldman Sachs, which served as a financial adviser to Coinbase’s direct listing, pointed to one of its earlier analyst reports that claimed high fees would continue to flow into the exchange even if the bitcoin price falls further.
Coinbase’s stock price is currently down a third from its peak in April, with the stock pushed lower by the tanking bitcoin and crypto market that’s lost more than $1 trillion in value over the last few months. The crypto sell-off was sparked by China shutting down those that use powerful computers to secure bitcoin and crypto networks in the country, known as miners.
However, Coinbase fees may have suffered due to a significant decline in trading volumes across most major exchanges since the bitcoin and crypto price crash.
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Trading volumes at the largest exchanges, including Coinbase, Kraken, Binance and Bitstamp, fell more than 40% in June, analysis by data company CryptoCompare revealed this week. Spot trading volumes fell 42.7% from May to $2.7 trillion, with derivative volumes down 40.7% to $3.2 trillion, it was first reported by Reuters.
“The digital asset ecosystem got punched in the face, so it’s currently up against the ropes versus fighting in the middle of the ring,” Teddy Vallee, chief investment officer at Pervalle Global, told CNBC. “Typically when you have large sell-offs, participants are quite fearful and pull back their chips.”