It’s been a tough week for Coinbase.
The popular cryptocurrency exchange announced that it would be listing Ethereum Classic (ETC) on its platform, and immediately, the price of ETC surged. But then, just as quickly, the price crashed back down, and Coinbase’s stock took a hit along with it.
Why is Coinbase stock crashing? There are a few possible explanations.
1. The Ethereum Classic listing was a pump-and-dump scheme.
There’s evidence that some investors were trying to artificially inflate the price of ETC by buying it up on Coinbase and then selling it off on other exchanges for a profit. This sort of market manipulation is illegal, and it’s possible that Coinbase will be held responsible if an investigation finds that it was happening on its platform.
2. The SEC is cracking down on cryptocurrency exchanges.
Securities and Exchange Commission has been sending subpoenas to cryptocurrency exchanges in recent months, and it’s possible that Coinbase is under investigation. If the SEC finds that Coinbase has been operating illegally, it could fine the company or force it to shut down.
3. investors are losing faith in cryptocurrencies.
The prices of all major cryptocurrencies have been falling in recent months, and this may be causing some investors to lose faith in the asset class. If people believe that cryptocurrencies are headed for a long-term decline, they may be selling their holdings and moving into other investments.
Whatever the reason, Coinbase stock is under pressure right now. It remains to be seen whether the company can recover from this setback or if this is just the beginning of a longer-term decline.