Have we hit the bottoms yet?
Since my last post just barely hours ago, we experience a more severe downtrend in cryptocurrency prices.
As of 8.30am ET, we have all major crypto currencies dropping very significant percentage points and there’s uncertainty if there will ever be a recovery.
What causes the downtrend
Whilst we can certainly attribute the downtrend to recent remarks by Chinese central authorities warning citizens to stay clear of cryptocurrencies, it’s important to note that there’s still that inherent FUD (fear, uncertainty and doubt) for most investors in cryptocurrencies and it doesn’t take much to set off a landslide. In addition, most investors has had the best ride of their lives in the last few months and it might be a wise move to take profit now (for less), rather than enter into a loss position.
Repercussion on Coinbase (COIN)
Needless to say, Coinbase should open significantly lower today. Futures for Coinbase (COIN) is currently at $221.78, a drop of $17.22 against yesterday’s closing. That’s a significant 7.21% drop. All within a day!
What can we expect next?
This current downtrend certainly creates a jolt for investors (or punters). Most likely, it might lead to the demise of some of the more minor cryptocurrencies (I shall not mention them). The shake-up will also mean that expectations on large price spike will need to be recalibrated. For companies like Coinbase which derive most of their revenue by taking a small percentage cut off trading volumes may have to be cautious in their forward financial forecast. There will certainly be scrutiny on their cashflow reports as well.