The rising volatility in stock markets is not the only reason Coinbase (COIN) fell by 7.96% last week. Nor is Bitcoin (BTC) losing 23% of its value in 2022 COIN stock risks breaking below the $99.00 level. On May 5, nearly 19,000 bitcoins worth $703 million flowed out of Coinbase.
In just four transactions with one of the biggest ones at 8,000 bitcoin, the outflow to a cold wallet hurt Coinbase’s stock price. Earlier in the month, Ethereum outflows also occurred. The selling pressure from both cryptocurrencies from Coinbase undermines the platform. It is a massive transaction that Coinbase investors did not expect.
By cold storing the crypto, the owner is implying a need to safeguard the holding physically. Cryptocurrency cold storage is offline storage that keeps the owner’s cryptocurrency keys from being stolen from a wallet. It is one of the safest methods for holding bitcoin. The wallets are not accessible through the internet. The user is giving up the convenience of accessibility from a hot wallet.
Government Oversight
Coinbase and the crypto market will eventually face oversight from governments. The industry is in the early phases of major reform. The added layers risk drying up the liquidity of the BTC market. If transactions fall, Coinbase stock faces more selling pressure.
