The crypto winter experienced by the crypto money market in the second half of 2022 has negatively affected many companies. After the explosion in 2021, most cryptocurrency companies’ revenues plummeted. This affects even the largest cryptocurrency exchanges. According to the latest developments, two major financial companies have downgraded the popular Bitcoin and altcoin exchange Coinbase (COIN). Here are the details…
Bitcoin exchange downgraded
Credit rating giant Moody’s downgraded both Coinbase’s (COIN) long-term credit rating and guaranteed senior unsecured ratings, citing “significantly weakened revenue and cash flow generation capacity,” said on Friday. Coinbase’s corporate family rating (CFR), a long-term rating that reflects the relative probability of a corporate family’s debt defaulting, has been downgraded to B2 from Ba3, both considered non-investment ratings. The company said it has downgraded the senior unsecured bonds from B1 to Ba2. Moody’s used the following statements:
The rating action reflects Coinbase’s significantly weakened revenue and cash flow generation capacity due to the challenging conditions in the crypto-asset operating environment characterized by sharp declines in crypto-asset prices and low client trading activity. Moody’s expects the company’s profitability to suffer despite announcing that its global workforce will be cut by approximately 950 employees.
Moody’s also cited the collapse of the FTX exchange and the consequent possible regulatory tightening on the crypto industry as a reason for the negative outlook in Coinbase’s revenue. The credit institution used the following statements:
While increased regulatory oversight may favor relatively more mature and compliant crypto-asset platforms such as Coinbase, Moody’s said the path to changes and improvements to the regulatory framework is rather uncertain and could upset crypto market participants.
S&P also downgraded Coinbase
Earlier this month, S&P Global Ratings, the largest global rating agency, also downgraded Coinbase’s long-term credit rating and senior unsecured debt rating for similar reasons. Coinbase shares fell 86 percent in 2022, partly due to the slowing of trading volume of cryptocurrencies, which remains Coinbase’s main revenue stream, after crypto prices fell sharply over the year, and the collapse of crypto companies like Three Arrows Capital, Celsius Network, and FTX. because of.
Despite multiple stock declines since December, COIN has rallied so far in 2023 and is now trading 60 percent higher than its level at the start of the year, impacting an uptrend seen in most cryptocurrencies this month. Coinbase shares rose almost 11 percent on Friday.
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