S&P downgrades Coinbase debt to speculative

The most recent wave of layoffs at Coinbase has led to a dramatic drop in investor confidence in the company’s ability to pay its debts.

The credit rating agency cited decreased trading volumes at Coinbase and extensive attention from authorities as reasons for its negative assessment.

Coinbase debt downgraded

The debt of the cryptocurrency exchange was downgraded by one position, from “BBB” to “BB-,” which moved it from “investment grade” to “speculative grade.”

In the view of S&P, the most trustworthy borrowers, such as the United States Government or Microsoft, deserve the highest possible rating, which is AAA. If a payment failure on a financial promise or when a bankruptcy petition has been submitted, letters farther down the alphabet, such as D are utilized.

FTX dealt a big blow

In a statement, S&P provided an explanation for the decision by pointing out that trading volumes at the exchange had “meaningfully reduced” and that heightened levels of regulatory scrutiny have come to be as a result of the high-profile collapse of FTX in November 2022.

Despite recent efforts to lower its operating expenses or any potential benefits it may receive from rising interest rates, the company stated that it anticipates Coinbase’s profitability to “remain pressured in 2023.” This is the case even though it may receive benefits from rising interest rates.

Coinbase in shambles

Coinbase made the announcement earlier this week that the company aims to cut its staff by around 950 people and, in the process, would be paying severance payouts that may range anywhere from $163 million to the maximum amount.

However, the corporation’s problems have not stopped significant investors from purchasing shares. The bulls on Coinbase bought the dip. This week, technology-focused fund Ark Invest, which well-known institutional investor Cathie Wood runs, purchased an additional 33,756 shares of COIN one day, and 74,792 the next.

Is Wood optimistic about bitcoin?

The total sum spent on the two transactions was close to $4.75 million. Wood has been placing optimistic wagers on Coinbase for quite some time, as seen by the fact that he has purchased a total of 12 different coins in the span of only one month.

Her flagship investment vehicle now has 8.596 million Coinbase shares, constituting around 3.23% of the fund’s assets.

It seems probable that the positive action from Ark Invest was a significant contributor to the recent increase in the stock. Over the course of the last week, Coinbase share prices have increased by 25.80%.

Wood has been placing optimistic wagers on Coinbase for quite some time, as seen by the fact that he has purchased a total of 12 different coins in only one month. It seems probable that the positive action from Ark Invest was a significant contributor to the recent increase in the stock.

Over the course of the last week, Coinbase share prices have increased by 25.80%.