Bitcoin, crypto-related stocks continue to fall despite Binance/FTX deal
A volatile session has whipped up Bitcoin (BTC) and crypto-related stocks like Coinbase (COIN) and MicroStrategy (MSTR) after Binance CEO Changpeng Zhao announced the outline of a deal for his exchange to buy rival FTX.
Read more: FTX agrees to sell itself to rival Binance amid liquidity scare at Crypto Exchange
Bitcoin (BTC), which had dipped to the low-$19,000 range this morning, bounced back to $20,500 after the deal was announced, but is now down over 12% to around $18,257. Ether (ETH) also fell over 15% to $1,340.
Stocks showed a similar pattern, now again with a steeper decline, with Coinbase ( COIN ) falling around 13% and MicroStrategy ( MSTR ) falling over 23%. And video game retailer GameStop ( GME ) fell nearly 5%. In September, GameStop said it would partner with FTX.US to promote interaction between the gaming and crypto communities.
Brokerage Robinhood ( HOOD ) — in which FTX CEO Sam Bankman-Fried owns a 7.6% stake — sank nearly 19%.
Analysts are mixed on the Binance-FTX deal’s implications for other crypto exchanges and brokerages including Coinbase and Robinhood.
“Although the knee-jerk reaction is that HOOD will be affected, we note that unlike COIN, Robinhood only has 14% of the total revenue from crypto token trading. It is far more diversified than COIN with stock and options trading,” Mizuho analyst Dan Dolev said in a research note to clients on Tuesday. Dolev added that he doesn’t see Coinbase getting an influx of customers, saying that “the rapid fall of a crypto exchange shows how volatile the crypto industry can be.” Mizuho rates Coinbase with neutral and Robinhood with a buy.
Separately, Needham’s John Todaro sees some early upside for Coinbase, saying in a note that “distractions and withdrawals from FTX could lead to new customer gains for COIN” in the near term. However, he warned that cryptocurrency falls and increased concern for crypto investors could lead to muted crypto interest. Needham rates Coinbase with a buy rating.
Speculation over Bankman-Fried’s FTX started after CoinDesk reported last week that a notable portion of sister company Alameda’s balance sheet was composed of FTT, which is the FTX exchange’s internal token.
As for what might be next for Sam Bankman-Fried and his team, the firm will “shift its focus to the US market, where it has spent a disproportionate amount of time in recent months,” Bernstein analyst Gautam Chhugani said in a note to the customers. “However, they are losing the ATM of the FTX international exchange, which enabled investment in the US entity,” Chhugani wrote, adding that a regulatory presence would also be reduced.
Read more: FTX Token Plunges As Market Fears Possible Alameda Contagion
UPDATE (November 8, 18:09 UTC): Added analyst commentary on Coinbase and Robinhood.
UPDATE (November 8, 19:25 UTC): Added commentary from Bernstein’s research team and updates market movements.
UPDATE (November 8, 19:51 UTC): Updates market movements.
