Why Coinbase and cryptocurrencies fell yesterday

Why Coinbase and cryptocurrencies fell yesterday - Coinbase IPO 279904The cryptocurrency market fell yesterday after a strong month for the sector. Coinshares reported that there were $ 474 million in inflows in the cryptocurrency market in July, reversing the $ 481 million in June outflows. 

Bitcoin (quotation BTC) was a big mover, dropping 5% at 14:30 PM ET and Solana was down 5,5% over the same period. The decline in cryptocurrencies led Coinbase Global to lose 5,6% and Silvergate Capital 6%. 

Alleged Ponzi scheme has attracted attention

Today's headlines have focused on the downside of cryptocurrencies, with an alleged Ponzi scheme attracting attention. The Securities and Exchange Commission (SEC) charged 11 people with fraud on Monday, and Binance.US withdrew the AMP token after the token was considered a stock in the Coinbase employee insider trading case. If you put the two together, it looks like the SEC is increasing law enforcement in the cryptocurrency industry.

The cryptocurrency exchange CoinFlex also announced that it has let "a significant number" of people leave within the company. The goal is to reduce costs by 50% -60% to try to remain solvent. CoinFlex blocked withdrawals when it accused Roger Ver of failing to honor a $ 47 million loan and the company is trying to survive. 

It didn't help that US equity markets fell on Monday. The movement is not abrupt, but this is another big week of gains and investors fear the news is not good enough to keep cryptocurrency funds. 

Normal volatility for the market

Today's movement is little more than normal volatility in the cryptocurrency market. But investors can draw some conclusions from the past few weeks. 

One is that the SEC is taking law enforcement seriously. It could take years to resolve the cases, but with the SEC lurking it's easy to see how cryptocurrency investors can be nervous about the future. 

A second aspect to note is the rapid turnaround of investors during the cryptocurrency winter. Many investors probably thought cryptocurrencies were in a multi-year downtrend, but the situation quickly reversed despite last week's negative gross domestic product and interest rate hike. 

Finally, the earnings season is in full swing and this will lead to trading volatility. Silvergate announced on July 19 that net income went from $ 20,9 million a year ago to $ 38,6 million, despite market weakness. Coinbase will unveil its balance sheet on August 9th and the results may not be great, but investors will be looking to gain momentum in the services business and cut costs to start taking effect. 

The future is still bright for cryptocurrencies, but the path continues to be bumpy. Today was simply a down day for valuations, but the trend could reverse tomorrow. 

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