Sebastian Sinclair

Blockworks

Coinbase stock has been on a tear this year, outperforming both the broader tech sector and bellwether digital asset bitcoin.



COIN is now up about 60% since the start of 2023, with a market capitalization of around $12.2 billion. The US-traded crypto exchange was changing hands for around $56 a share through Tuesday’s closing bell in New York.&nbsp;



US technology heavyweights have likewise benefited this month from long-awaited macro tailwinds that have slowed — if not reversed — 2022’s carnage across digital and traditional assets.&nbsp;



But not on Coinbase’s level.&nbsp;



A prominent dollar-weighted tech stock index, trading on the New York Stock exchange under the ticker <a href="https://www.bloomberg.com/quote/NYFANG:IND#xj4y7vzkg" target="_blank" rel="noreferrer noopener">NYFang</a>, has meanwhile recorded 16% year-to-date gains — leaving the index 44% behind Coinbase’s 60% pop over the same period. 



Not to mention that the NASDAQ-100 Technology Sector Index, a collection of equally weighted tech stocks, has also posted a smaller increase: around 11%.&nbsp;



The former index tracks the showing of some of the largest US tech equities, including Meta Apple, Amazon, Netflix and Google. Its performance has marked a notable rebound from its downturn last year — but one still much weaker relative to Coinbase.



COIN booked a slight decline in after-hours trading on Tuesday, dipping to $52.48, good for a -1.8% decline, <a href="https://www.nasdaq.com/market-activity/stocks/coin/after-hours-trades" target="_blank" rel="noreferrer noopener">data</a> show. Still, the exchange’s shares are up more than 23% compared to <a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">the price of bitcoin,</a> which has soared 37% year to date. 



Crypto’s blue-chip equity eked out a close above a previous daily high near $50 last week, its highest point in more than 40 days. It’s a welcome reprieve for the embattled exchange, which has taken hits from the broader industry sell-off that dragged down scores of its publicly traded digital asset peers last year, including crypto miners.&nbsp;



The collapse of the likes of Genesis, Three Arrows Capital, FTX and Voyager exacerbated selling pressure throughout 2022 amid concerns over the exchange’s path forward — and especially its correlation to shell-shocked digital assets.



Market participants by then had also grown wary of trusting centralized entities with their funds.&nbsp;



Speculation over the exchange and its stock came to a head by mid-December as it continued to post <a href="https://blockworks.co/news/coinbase-stock-hits-sixth-all-time-low-this-month" target="_blank" rel="noreferrer noopener">consecutive daily dips</a> before reaching an all-time low of $31.55 by Jan. 6.



Following a jump on Jan. 9 — which more or less coincided with several of bitcoin’s price spikes — exchange sentiment was bolstered by its agreement to settle with <a href="https://blockworks.co/news/coinbase-stock-up-after-settlement" target="_blank" rel="noreferrer noopener">New York state regulators</a>.



Coinbase CEO Brian Armstrong promised shareholders in August he would <a href="https://blockworks.co/news/coinbase-ceo-touts-subscriptions-to-curb-reliance-on-trading-fees" target="_blank" rel="noreferrer noopener">diversify his company’s revenue</a> by moving away from its reliance on trading fees. 



“It’s never as good as it seems, it’s never as bad as it seems,” Armstrong told CNBC at the time over questions on the macroeconomic outlook and the exchange’s financial conditions. “We try not to get focused on short-term ups and downs, we just zoom out.” 



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Coinbase

Coinbase Stock Crushing Blue-chip Tech Index by 44%

Digital asset prices jumped to life Monday as bellwether crypto bitcoin found reprieve above $17,000, an area of contention that saw mild volatility oscillating around a key support line.



Bitcoin jumped to its highest point in more than 20 days above $17,400 dragging most crypto higher on intra-day trading before conceding all of its gains and finishing down 0.8% on the day.



The initial charge in crypto, egged on by Federal Reserve chair <a href="https://blockworks.co/news/powell-leans-hawkish-ahead-of-december" target="_blank" rel="noreferrer noopener">Jerome Powell’s</a> hint last week of slowing interest rate hikes this month, also did little to quiet concerns over traditional equities, which slid further on the day.



An initial rally that began to pick up steam towards the end of last month has been short-lived where major stock indices posted a peak around Nov. 30 and Dec. 1 before giving up most gains on the back of the Fed’s interest rate flag.



The Dow Jones Industrial Average shed 1.4%, to 33947 while the Nasdaq Composite also dropped 1.9%, closing at 11239, Tradingview data shows. The S&amp;P500 also fell 1.8% to 3998.



Most digital assets over a 24-hour period traded in the red Monday down between 1% and 3%, a mild showing by comparison. Axie Inifinity’s native crypto, AXS, saw the largest gains among projects with a market capitalization above $1 billion — climbing 29% on the day.



It would appear, at least in the short term, the decoupling of crypto assets&#8217; correlation to tech stocks is waning as volatility in the market begins to slow following FTX’s collapse.



Bitcoin’s 30-day correlation coefficient to the tech-heavy ETF known as the Qs fell to its lowest level in more than <a href="https://blockworks.co/news/bitcoin-qqq-correlation-dips-to-new-low" target="_blank" rel="noreferrer noopener">three years</a> — hinting at a further divergence in the relationship between traditional equities and crypto.



Still, Zhong Yang Chan, CoinGecko’s Head of Research told Blockworks via Telegram the challenging macroeconomic environment of high inflation, lower consumer spending and a risk-off attitude generally meant future volatility couldn’t be ruled out.



“Bitcoin seems to have found a support level post-FTX collapse at around $16,000,” Chan said. “The Fed’s latest announcement on potentially moderating interest rate hikes has provided some respite, but may also be a precursor to holding interest rates high for a longer period of time.”



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Axie Infinity

Bitcoin Price Holds $17k as Tech Stock Index Slips

Bessie Liu

<div id="highlights-block_6335ded45aff9" class="highlights">
 <ul>
 <li>“​​The increase in GBP this week along with other currency instabilities has led to a stronger bid and narrative for bitcoin which we haven&#8217;t seen in some months,” Katie Talati, director of research at Arca, told Blockworks </li>
 <li>Coinbase Global (COIN) dropped by 9.5% after it was recommended as an underweight stock by Wells Fargo</li>
 </ul>
 
</div>



The British pound reached record lows this week, dipping to $1.03 — sending shockwaves across world markets and adding unease to the already sharp interest rate increases in the United States.



Although the US Dollar Index has been trending upwards on a monthly scale since May this year, six of the 11 Wall Street stock indexes slipped by over 2%, as concerns around a global economic slowdown linger.&nbsp;



The price of Coinbase Global (COIN) also dropped by 9.5% in the past 24 hours as of 2:00 pm ET, following a downgrade from Wells Fargo to “underweight” on Thursday.&nbsp;



In previous years, inflation often correlated to a boost in local interest to purchase cryptocurrencies, Serhii Zhdanov, CEO of EXMO, a UK-based cryptocurrency exchange, told Blockworks.&nbsp;



However, the crypto bear market cascaded by the crashes of multiple cryptoassets has damaged reputation and interest in cryptocurrencies, he said.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Cryptocurrencies are no longer perceived as hedge assets,” Zhdanov said.</blockquote>



All things considered, the prices of both bitcoin and ether remained relatively stable.



<h3 class="wp-block-heading">Waning correlation with tech</h3>



Bitcoin briefly rose by 2.7% over the past week from roughly $18,000 last Thursday to a peak of  $19,600 today.



The leading cryptoasset has traded in a range between about $18,500 and $20,300 since Sept. 13.



Similarly, ether’s price has also remained steady over the past week, increasing by around 4% from $1,270 last Thursday to roughly $1,300 today.



Katie Talati, director of research at Arca, notes that “in general, crypto is very negatively correlated with the US dollar, particularly bitcoin, which makes sense as bitcoin is a monetary replacement to the US dollar.”



Bitcoin and the broader crypto markets have tended to be strongly correlated with the tech-heavy Nasdaq index (QQQ).



But both correlation trends have shifted noticeably this week — that is, BTC is less correlated with tech and more correlated with the dollar, rather than its typical inverse relationship.



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/X2w6arY5k7TW9By5cgCz8ihtOPiyTj51sb0JEwBQG8DlAysBueFuvm3lM1dQwEwxgW9neuO7K8MF1xExwV9wxkzN76N20QpAMLXVknQvo7-8QTRC6H1Gw1PMLi7kFqG4K3OMzXcVlu1f1jseC7os6xtERF_zxm2pOLW3jn4ZFFAV2Sv8lipW8JwR9Q" alt=""/><figcaption>Correlation coefficient between BTC and QQQ — Positive values mean the assets trade together | Source: TradingView</figcaption></figure>



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/3cmXe7iXIbNwxQEec_u6oKVYo3oRZgbf-oJG3txbBlUJPKokU6MiAmOB7t-2CkGWv7HSnNZ09Xrlzg8hck0p-2qtwscgstekURNeoQ6zB3z-mFVD9Zpsc3mo53CgUpAmFJhsXnbCJzoGpeDW8J5tZwZW3lZFfrRy31q6bhVdld5JJNectg2to_ZGMQ" alt=""/><figcaption>Correlation coefficient between BTC and DXY — Negative values mean the assets trade inversely | Source: TradingView</figcaption></figure>



“​​The increase in GBP this week along with other currency instabilities has led to a stronger bid and narrative for bitcoin which we haven&#8217;t seen in some months,” Talati said.&nbsp;



Other cryptocurrency tokens prices that were noteworthy this week include troubled lender Celsuis’s CEL token, which dipped from $1.5 to $1.3 after CEO Alex Mashinsky announced that he would be <a href="https://cms.blockworks.co/alex-mashinsky-steps-down-as-celsius-ceo/" target="_blank" rel="noreferrer noopener">stepping down</a> from his position. Cosmos’ ATOM token, which surged to almost $17 on Sept. 17 in the run-up to the Cosmosverse conference this week, has since dropped back to roughly $12 as the conference concludes.



In the following week, Talati said that some of the tokens that she will be keeping an eye out for include Chiliz’s CHZ token and Algorand’s ALGO token, which will be featured during the FIFA World Cup in November, and Apecoin, as it prepares to launch staking at the end of October.&nbsp;



She added that “[ether] is top of my list as post-Merge, any new supply is <a href="https://cms.blockworks.co/is-ether-deflationary-now-it-depends/" target="_blank" rel="noreferrer noopener">locked up and new supply emitted is far lower</a> than when Ethereum was a PoW chain. I believe the market is very much undercounting this trend.”



Macauley Peterson contributed reporting.



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Bitcoin

Bitcoin Ranges Steady Despite Tech Downtrend

Casey Wagner

<div id="highlights-block_630911f69039f" class="highlights">
 <ul>
 <li>Equities and cryptos plunged lower Friday in the aftermath of Jackson Hole</li>
 <li>Bitcoin especially is trading like a big tech stock, analysts say, and until there is a change in macro conditions, this will continue</li>
 </ul>
 
</div>



Markets extended declines Friday after Federal Reserve Chairman Jerome Powell took a more hawkish stance during his Jackson Hole remarks. Cryptocurrencies slipped further into the red as traders became increasingly discouraged by the Fed’s likely move in September.&nbsp;



The S&amp;P 500 and Nasdaq were trading 2.3% and 2.8% lower, respectively, at time of publication. Bitcoin and ether similarly lost 4% and 7%, respectively.&nbsp;



“Today&#8217;s reaction to Fed Chairman Powell&#8217;s speech at Jackson Hole is somewhat surprising, as he did not really say anything new, at least to Fed watchers, and markets had appeared to have largely priced in a 75 basis point rate hike,” Bill Cannon, head of portfolio management at digital asset fund manager Valkyrie Investments, told Blockworks.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Powell has been transparent through his comments recently that rate hikes were needed to cool inflation, and today&#8217;s statement reinforced this strategy,” Cannon said.</blockquote>



Cryptos have struggled to turn around this year. Bitcoin and ether are both down more than 50% year-to-date, and without a significant shift in macroeconomic conditions, analysts are not expecting a rally.&nbsp;



“With inflation, unfortunately bitcoin acts like a tech stock,” Patrick Feeney, former hedge fund trader and founder of Feeney Factor, said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“[Bitcoin is] supposed to be digital gold, but it&#8217;s just not panning out that way lately,” Feeney said.&nbsp;</blockquote>



<h3 class="wp-block-heading">Bitcoin correlation and market expectations</h3>



Bitcoin’s correlation coefficient with the S&amp;P 500 hit 0.64 in early May before falling to around 0.4 earlier this month, according to <a href="https://charts.coinmetrics.io/correlations/#435" target="_blank" rel="noreferrer noopener">data</a> from Coin Metrics. A coefficient of 1 means the assets are moving perfectly in sync.&nbsp;



The trend is back on the rise though, data shows, with the correlation coefficient hovering near 0.5 earlier this week.&nbsp;



“For the past year, crypto and equity markets have traded tightly together,” Clara Medalie, strategic initiatives and research director at data provider Kaiko, told Blockworks <a href="https://cms.blockworks.co/bitcoins-correlation-with-stocks-bonds-hits-3-month-low/" target="_blank" rel="noreferrer noopener">earlier this month</a>. “What we’ve seen over the past year is that correlations tend to strengthen around key releases of economic data, such as Fed meeting notes or inflation numbers.”&nbsp;



Recent data, such as plunging unemployment numbers and the <a href="https://cms.blockworks.co/inflation-is-cooling-but-rally-in-crypto-stocks-may-not-last/" target="_blank" rel="noreferrer noopener">latest</a> Consumer Price Index (CPI) report, may suggest that inflation is cooling. The Fed’s preferred measurement of inflation, the Personal Consumption Expenditures price index, which was released Friday ahead of Powell’s remarks, also shows easing prices in July. The year-over-year change for July came in at 6.3%, down from 6.8% in June.&nbsp;



Still, Powell <a href="https://cms.blockworks.co/cryptos-equities-slide-as-traders-unpack-powells-jackson-hole-remarks/" target="_blank" rel="noreferrer noopener">warned Friday</a> there is still a long way to go before sustained price stability is reached.&nbsp;



“Estimates of longer-run neutral are not a place to pause or stop,” Powell said during his speech on the second day of the <a href="https://www.kansascityfed.org/research/jackson-hole-economic-symposium/" target="_blank" rel="noreferrer noopener">Economic Policy Symposium</a>, hosted by the Kansas City Federal Reserve. “Our decision at that September meeting will depend on the totality of the incoming data and the evolving outlook,” he said.



Futures markets now are calling for a 60.5% chance of a 75 basis point rate hike in September, which would mark the central bank’s third consecutive increase of that size, according to <a href="https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html" target="_blank" rel="noreferrer noopener">data</a> from CME Group.



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jackson hole

Bitcoin Trading Like Big Tech as Markets Reel

David Canellis

<div id="highlights-block_62797ac6dfb8f" class="highlights">
 <ul>
 <li>Bitcoin’s price has tracked blue chip tech stocks such as Apple, Amazon and Microsoft all year</li>
 <li>The recent market downturn has only strengthened that correlation</li>
 </ul>
 
</div>



Nearly $240 billion has been wiped from crypto markets since Friday as the macro headwinds weighing on digital assets intensify.&nbsp;



Bitcoin fell 15%, from $36,000 to trade around $30,700 at press time. Ether and XRP, respectively, shed 14.5% and 18%, while Solana&#8217;s SOL and binance coin were the hardest hit of the top cryptocurrencies – both dropping 19%.



Overall, crypto is now worth $1.4 trillion (a touch less than Alphabet’s market capitalization), having lost 15% over the weekend to its nadir since July 2021.&nbsp;



Crypto stocks also took a beating. Top mining stock Marathon Digital slumped 17% Monday; Coinbase tanked 18%; and MicroStrategy crumbled nearly 25% — which collectively equates to more than $5.4 billion in shareholder losses.



But sour crypto markets echo poor performing equities across the board. The S&amp;P 500 dropped 2.5% as markets opened, and the tech-heavy NASDAQ 100 sank 3.5%.



The S&amp;P and NASDAQ have now respectively lost 16% and 26% year to date. For scale, cryptocurrencies’ total value collapsed more than 35% over the same period, according to TradingView data compiled by Blockworks.



Indeed, crypto and equity markets are increasingly correlated, particularly with tech stocks, as bitcoin’s price has tracked blue chip tech stocks such as Apple, Amazon and Microsoft all year.



And little has changed in the most recent downturn. In fact, correlation is tightening.&nbsp;



“Right now, correlations are appearing across and within most asset classes, not just crypto,”  Beimnet Abebe, vice president of principal trading at <a href="https://www.galaxydigital.io" target="_blank" rel="noreferrer noopener">Galaxy Digital</a>, told Blockworks. 



Recent significant changes to monetary policy, Abebe said – on top of the highest inflation rates in a generation – have put pressure on crypto and other assets following a time of “extremely loose” federal bank quantitative easing-friendly regimes.&nbsp;



“Over the long run, we will see a decoupling of cryptoassets as tokens mature and develop all with their own idiosyncratic features,” Abebe said.



<h3 class="wp-block-heading">Crypto capitulation breeds innovation</h3>



But what will it take to see crypto actually decouple from tech stocks?&nbsp;



David Nage, portfolio manager at crypto investment firm Arca, told Blockworks it might take full capitulation.



Nage reasoned that a previous de-pegging of correlations between digital assets and tech stocks happened after March 2020, when both equity and crypto markets spiraled due to the pandemic becoming a black swan event.



Crypto markets took off in April, May and June of 2020 while tech stocks were still finding their footing. Many attributed those surges to widespread lockdowns, with day traders tapping digital assets with their stimulus checks.&nbsp;



So, it stands to reason that a rebound in crypto markets might be triggered once we see more experimentation across DeFi and gaming and decentralized finance (GameFi), according to Nage.



“I definitely believe the way that digital assets will potentially de-peg from its correlation with equities will be to attract interest, and it’s new platforms and innovation that create that,” he said.



But Nage isn’t seeing tremendous innovation in DeFi (decentralized finance). Instead, he’s mostly witnessing copy-paste projects that mimic Ethereum-powered DeFi projects that were popular in 2020: decentralized exchanges and automated market makers.



“What we’ve seen from past crypto winters, especially during 2018, is that there will be a period of time when innovation starts, when founders start to buckle down – they start building platforms that garner our attention and use-cases rather than raising funds every three months,” he said.



Nage pointed to three crypto companies that raised money through the last big “crypto winter”: Fireblocks, OpenSea and Blockdaemon. These are “formative pieces of infrastructure that have made a lot of things possible today,” he said.&nbsp;



<h3 class="wp-block-heading">Crypto can still become a tool to battle inflation</h3>



If other layer-1 chains have been hotbeds for innovation, why does the market still follow bitcoin?



“Bitcoin is the most liquid of all cryptoassets, so that’s where institutions are focusing their energy, making it likely to lead crypto market sentiment for the foreseeable future,” Galaxy’s Abebe said.



But crypto proponents once claimed digital assets could serve to hedge against growing inflation and even diversify portfolios. Bitcoin’s losses have instead amplified inflation over the past year, while crypto’s high correlation with tech stocks means digital assets serve as pseudo-leveraged bets on the world’s largest companies.



To Nage, the problem of inflation is now staring us in the face. It’s something that multiple generations haven’t had to deal with before. He envisions a period of adjustment which will birth new playbooks, guided by reviewing what we did before to curb inflation, “and that will take some time.”



“At the end of the day, our generation alongside newer generations are always going to be incredibly interested in digital assets and technology,” Nage said. “We’re the mobile-native, crypto-native generation – games, mobile devices, the internet, this is what we know.”



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