Coinbase Global sank to a record low as investors fled high-flying market newcomers.
The operator of the largest US cryptocurrency exchange slumped 6% to US$256.76 on May 6, dropping for a fourth straight day. That left the shares just above the US$250 reference price for its April direct listing.
An exchange-traded fund that tracks shares of companies that recently went public plunged for an eighth day, the longest slide since 2015. Virgin Galactic Holdings and Opendoor Technologies, companies that came to market through blank-check offerings, each sank at least 3.8%.
See: Coinbase's whipsaw debut takes it past US$100 bil, then back
“We saw a mini-bubble in SPACs, IPOs, crypto, clean-tech and hyper-growth in late 2020 and early 2021 and many of these asset classes are nursing bad hangovers,” said Mike Bailey, director of research at FBB Capital Partners.
Coinbase’s slide comes as investors pour into extremely speculative cryptocurrencies such as Dogecoin and Binance Coin -- tokens that the exchange doesn’t offer. Most of its traffic had come from Bitcoin trades, but the price of the largest crypto coin has been mired in a narrow band for weeks. Coinbase started trading at US$381 on April 14 before briefly topping US$400. It’s now down 22% from the close on its first day.
See also: Race for lower commissions to impact Coinbase
Nasdaq had set a reference price of US$250 a share on April 13 for Coinbase’s direct listing, a number that is a requirement for the stock to begin trading, but not a direct indicator of the company’s potential market capitalisation.
“What has really hurt Coinbase, now that their direct listing has taken off, you’re seeing expectations that other exchanges are coming on board,” said Edward Moya, senior market analyst at Oanda. “There’s this belief this could be as good as it gets for Coinbase in the short-term.”
The Renaissance IPO ETF dropped 4.2% on Thursday, bringing its year-to-date loss to about 14%.
