Goldman Sachs Downgrades Coinbase to Sell

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The value of one of the largest crypto exchanges in the world fell from $75 billion to $12.4 billion in less than a year due to the contraction of the digital asset market.

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Analysts at one of the largest investment banks Goldman Sachs downgraded the rating of the cryptocurrency exchange Coinbase from “neutral” to “sell”, as the crypto winter continues to affect the crypto market. After such news, the shares of the exchange fell by 11%, to $55.96 apiece. The overall drop in Coinbase shares in 2022 was over 78%.

According to Goldman Sachs analyst William Nance, the continued fall in the value of cryptocurrencies and the decrease in the level of activity in the industry have also affected Coinbase shares. Even before the downgrade, the company’s shares fell 75%:

“We believe that Coinbase will need to cut its costs substantially to stem the cash drain as retail activity is severely reduced.”

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Last year, when the value of Coinbase exceeded $75 billion, the company quickly became the epitome of a boom in demand for digital currencies – at the same time that the price of bitcoin reached an all-time high. Since then, however, the company has had to face a number of challenges, including declining revenue and trading volume. Coinbase is now valued at around $12.4 billion.

Bloomberg analysts Subrat Patnaik and Matt Turner said that Coinbase investors are not the only ones unhappy with the crypto exchange. The company’s senior secured bonds maturing in 2031 also came under pressure. Goldman Sachs analyst William Nance said the exchange will have to face even bigger challenges in the future, such as “retaining talent within the company.”

Earlier, Moody’s credit rating agency downgraded Coinbase’s rating due to a marked decrease in the exchange’s income over the past few months, as well as a weakened potential for income growth.

Source: Bits

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