Cryptocurrency update: Coinbase tanks on market volatility

Coinbase, one of the largest crypto exchanges in the world, has seen a dramatic drop in its share price thanks to the crypto market’s recent ups and downs.

Cryptocurrency update

Coinbase shares tank on crypto market instability

One of the world’s most popular digital token exchanges, Coinbase, suffered a huge share price drop after the latest bout of market volatility.

Coinbase shares are now a whopping 45% off its all time high of $342 when the exchange went public in April 2021. Following the recent downward trends in the global crypto market, the stock was trading for $187 per share.

This makes a lot of sense. Coinbase’s main source of income and value as a business is derived from the token price of popular coins, but especially Bitcoin. BTC has been up and down and struggling across the past couple of weeks, so it’s natural the COIN share price rises and falls with it.

Let’s contextualise the share price fall a bit more. When Coinbase made its initial public offering (IPO) in April, Bitcoin was cruising. It had recently struck what was then an all-time-high of $64,000. Flash forward to February 2022, and Bitcoin has been performing under $40,000 after crashing in January.

At the time of writing, Bitcoin was trading for just over $38,000, up 2.75% on the day. Some good news? Traders feel the coin will essentially stay range bound. It would take a lot to push BTC above $40,000 and back on the track for $50,000.

Several factors explain Bitcoin and the wider crypto markets recent woes. Firstly, regulation is probably going to get tighter. We’ve seen in recent weeks the SEC, White House, Bank of England, and others indicate a stricter regulatory environment is on the way; maybe not in 2022, but it’s on the way.

Investors may not be so keen to pursue crypto investing, depending on how restrictive any set of regulations is. Nothing concrete has been offered yet, but the fact regulation is on the way is enough to make crypto traders and investors a bit wary.

Secondly, a broader tech sell off at the start of the year, and carrying on through most of January, caused by higher inflation, saw investors divest themselves of risky assets. Crypto coins were on the chopping block.

The tech sell-off is basically over but its aftershocks are still being felt in the crypto sector, although the Meta/Facebook price plunge has been weighing on crypto trades in the past couple of days. An advance from Amazon appears to be lifting things, however.

Ethereum, for example, is up over 6% on the day.

US lawmakers reintroduce crypto tax relief bill

A number of US representatives from across the political spectrum has reintroduced the Virtual Currency Tax Fairness Act.

The bill would exempt customers from paying tax on crypto payments under $200. The aim would be to simplify the tax burden for daily crypto users. Under current legislation, users must report all gains, no matter how small, to the IRS.

“Virtual currency has evolved rapidly in the past few years with more opportunities to use it in our everyday lives,” Democrat Congresswoman Suzan DelBene, part of a group of 4 House Reps heading the bill’s reintroduction, said. “The US must stay on top of these changes and ensure that our tax code evolves with our use of virtual currency.”

The lawmakers last introduced the legislation as the “The Virtual Currency Tax Fairness Act of 2020” in January 2021. Consumers must now report changes in a cryptocurrency’s value in dollars from when they purchased the crypto to when it was used in a transaction, including even minor retail purchases.

If it becomes law, the legislation will retroactively apply to all qualifying transactions from Dec. 31, 2021.