In it Coin baseThe stock (WKN: A2QP7J) could be hit again at the end of last week more conciliatory tones. Shares in the crypto market ended up rising 9% in intraday trading alone. It is not a turnaround yet. But at least a course plus.
Nevertheless, the investment dissertation is currently difficult. Coinbase loses market share. There were also reports of an internal dispute between management and employees. Also in parts in terms of content orientation. With the NFT platform late, management may have cut itself in the foot. But there is still future potential.
Now a competitor is putting pressure on. It could make things worse for Coinbase stocks, at least temporarily. Let’s look at the details.
Coinbase Stock: Does Binance Have a Competition Issue?
The battle for market share between Coinbase, Binance and other platforms seems to have begun. In this context, Binance has now stated that it wants to cut fees and thus make trading cheaper for its own customers.
Yes, one might even drop fees completely for certain spot trades. Specifically, this will be the case in the future for US dollar trades and for Tether, USD Coin and Binance USD. That is, with the cryptocurrencies, which are considered so-called stack coins.
Trading volumes for Ethereum and Bitcoin are primarily relevant to the Coinbase stock. However: there are other currencies that are making the finishing touches on growth. This move is also likely to usher in a new phase of competition and price wars. Binance also has a strong competitive position in the United States. In this respect, these headings are certainly not irrelevant.
It could come at the worst possible time for Coinbase stocks. The bottom line is that the crypto market is already under pressure and struggling on several fronts. But also in times of inflation with rising costs and lower volumes. Striving for market consolidation is therefore risky for all players. But perhaps Binance here is taking a calculated risk of winning more shares from a dwindling market cake.
If it were to happen at Coinbase’s expense, it would be a problem. It does not reduce the pricing power in times of inflation, which are already scarce due to competition. No, there is a market offensive where you would have to pull level but would lose.
An investment dissertation for the Coinbase share is not only about trading volumes, but also partly about value-creating services. Still, competition and competition may be another issue that foolish investors should certainly look very closely at right now.
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Vincent owns shares in Coinbase. The Motley Fool owns shares in and recommends Coinbase.