- Coinbase also claimed to have minimal exposure to FTX’s token FTT.
- Coinbase has seen its stock price drop by 87% in the previous year.
On Monday, Coinbase’s stock price dropped to a record low of $40.61. According to CoinGecko statistics, the two biggest cryptocurrencies by market cap, Bitcoin and Ethereum, both declined. Bitcoin dropped 5.5% to $15,665, while Ethereum dropped 8.2% in a day to $1,081.
Coinbase has attempted to capitalize on the demise of FTX by portraying itself as a more reliable and law-abiding cryptocurrency exchange. Coinbase issued a similar remark, claiming the impossibility of a bank run on their exchange due to the 1:1 backing of client funds. It also claimed to have minimal exposure to FTX’s token FTT.
Domino Effects Impact
With deposits totaling $15 million on FTX as of November 8, the exchange did reveal exposure to Alameda Research. Despite being one of the oldest and biggest exchanges, Coinbase has seen its stock price drop by 87% in the previous year. Moreover, it has laid off over 60 workers this month, after prior, bigger waves of layoffs.
Problems experienced by the exchange in recent months may be an illustration of the “crypto contagion” notion, which states that the failure of a single cryptocurrency-related business can lead to a domino effect that would ultimately harm the whole sector.
When the stock market drops, the cryptocurrency market drops with it. Both the S&P 500 and the NASDAQ Composite Index fell by 0.94 percent today.
The market drop on Monday is also being linked to remarks made by San Francisco Federal Reserve President Mary Daly. Daly warned that “adjusting too little will leave inflation too high,” while “adjusting too much could lead to an unnecessarily painful downturn” in an address to the Orange County Business Council on Monday.
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