Coinbase put out a blog post to say that it “had no financing exposure” to Celsius, Three Arrows Capital, or Voyager digital. They did note that the Coinbase Venture program did make non-material investments to Terraform Labs.
Following the announcement, shares of the company skyrocketed by 10%. “Many of these firms were over-leveraged with short-term liabilities mismatched against longer duration illiquid assets,” the company said, adding, “we have not engaged in these types of risky lending practices and instead have focused on building our financing business with prudence and deliberate focus on the client.”
This could be good news for ETFs with exposure to Coinbase (COIN), including the Invesco Alerian Galaxy Crypto Economy ETF (SATO ). Like much of the crypto ecosystem, Coinbase has taken its lumps recently as crypto winter has set in. Despite falling 81% in the first half of the year, Coinbase has made gains in the third quarter.
Many experts think that Coinbase can navigate the bleak tundra landscape of the crypto winter. D.A. Davidson analyst Christopher Brendler still has a buy rating on Coinbase stock lowered his 12-month price target from $135 to $90. Earlier this month, Coinbase launched a derivatives product, to help buoy its flailing core spot-trading business.
Bitcoin, meanwhile, climbed to $24,000 today as cryptocurrency, in general, saw a broad recovery brewing. Investors are still concerned the Fed will be aggressive, and all eyes are on the interest rate hikes likely to happen next week as central banks around the world look to dampen inflation. These policies have contributed to investors shying away from risky assets like crypto.
“The shocks to the crypto credit environment over the last few weeks are likely to be a major inflection point for the industry,” according to the blog. “Notably, the issues here were foreseeable and actually credit specific, not crypto specific in nature. Many of these firms were over-leveraged with short-term liabilities mismatched against longer-duration illiquid assets.”
For more news, information, and strategy, visit the Crypto Channel.
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