Crypto Biz: Coinbase downgraded, 3AC deemed insolvent and Michael Saylor buys the dip

Coinbase has long been considered an important bellwether of the cryptocurrency market. Last year, when the company was expanding its workforce, adding institutional clients and issuing stock, crypto prices were hitting record highs. Now, in the depths of crypto winter, Coinbase finds itself slashing a fifth of its workforce, losing retail trading volume and contending with downgrades of its credit and stock.

This week’s Crypto Biz dissects Goldman Sachs’ latest downgrade of Coinbase and also looks at the latest developments surrounding Three Arrows Capital.

Goldman Sachs downgrades Coinbase stock to ‘sell’

After a promising debut on the Nasdaq stock exchange in April 2021, it has been nothing but down for Coinbase shares. The company, which once had a fully diluted market capitalization of nearly $100 billion, has been caught in a downward spiral amid crypto winter. Recognizing the 80% decline in Coinbase stock, analysts at Goldman Sachs this week downgraded the company to “sell,” which is basically a recommendation that investors liquidate their positions and be done with the stock for now. Goldman isn’t the only firm turning bearish on Coinbase. Earlier this month, credit rating agency Moody’s downgraded the company to a Ba3 rating, which is considered a non-investment grade.

21Shares responds to bear market with crypto winter ETP

Swiss asset manager 21Shares is gearing up for crypto winter by launching a new product that allows investors to gain low-cost exposure to Bitcoin (BTC). Earlier this week, the company introduced its 21Shares Bitcoin Core exchange-traded product, also known as CBTC. What makes CBTC so unique is its paltry expense ratio of just 21 basis points, which is 44 basis points below the next cheapest product on the market. Basically, 21Shares wants you to keep stacking sats — or buying shares in its ETP — during the market downturn. Unless you think Bitcoin is dead, the best time to accumulate is during bear markets.

British Virgin Islands court reportedly orders to liquidate 3AC

The brain trust behind Three Arrows Capital, also known as 3AC, has been radio silent over the past few weeks amid reports that the hedge fund is bankrupt. On June 27, a court in the British Virgin Islands ordered that 3AC be liquidated, setting the stage for further volatility in the cryptocurrency market. Although details were sparse, the liquidation ruling came shortly after the crypto exchange Voyager Digital handed 3AC a notice of default for its failure to pay back a massive loan that included 15,250 BTC and 350 million USD Coin (USDC). Buckle up, ladies and gents, the next few months are going to be ugly.

MicroStrategy scoops up 480 Bitcoin amid market slump

Concerns about Michael Saylor’s conviction on Bitcoin were laid to rest this week after the MicroStrategy CEO announced that his company had acquired an additional 480 BTC for $10 million. MicroStrategy is now sitting on a colossal 129,699 BTC valued at a combined $3.98 billion. Given its average purchase price of $30,644 per BTC, the company has a net unrealized loss of around $1.4 billion tied to Bitcoin. With crypto winter only just beginning, it could take years for MicroStrategy to break even on its holdings. Saylor is as unfazed as ever, though.

MicroStrategy has purchased an additional 480 bitcoins for ~$10.0 million at an average price of ~$20,817 per #bitcoin. As of 6/28/22 @MicroStrategy holds ~129,699 bitcoins acquired for ~$3.98 billion at an average price of ~$30,664 per bitcoin. $MSTRhttps://t.co/leQYTXn817

— Michael Saylor⚡️ (@saylor) June 29, 2022

Don’t miss Where is Bitcoin headed next?

Bitcoin’s paltry rally toward $22,000 earlier this week had some investors excited that a short-term breakout was imminent. Well, that didn’t happen. Now, investors are wondering whether we will see $30,000 or a sub-$17,000 BTC first. In this week’s Market Report, I got to dissect the latest market developments with fellow analysts Jordan Finneseth, Benton Yuan and Marcel Pechman. You can catch the full replay below.