The trading platform, which also experienced technical issues for some users, was down 8% to US$219.16 at open, compared to its market debut at US$250 per share just a month ago.
The crypto market’s total value stood at around US$1.57 trillion on Wednesday, down a quarter in just a day.
We’re seeing some issues on Coinbase and Coinbase Pro and we’re aware some features may not be functioning completely normal. We’re investigating what’s going on right now, and as soon as we know more we’ll let you know.
— Coinbase Support (@CoinbaseSupport) May 19, 2021
It seems the crash was triggered by a warning from Chinese regulators that financial institutions and payment providers should not accept crypto as a payment method or offer services related to digital currencies.
Another possible culprit is Elon Musk and his electric car company Tesla Inc (NASDAQ:TSLA), which caused similar declines earlier this month by deciding to suspend payments for its products in Bitcoin after citing concerns about the environmental impact of the energy used in mining the crypto.
This makes Coinbase “one of the worst direct listings ever”, said OANDA’s Edward Moya, who reckons this crash will not bode well for attracting new customers.
“Coinbase wants new crypto traders, but many will be afraid that this Bitcoin crash could end up just like the one in 2017,” he said. “Coinbase’s trading debut coincides with the top for Bitcoin and many traders can’t make a convincing argument that it will be able to recover all those losses since then.”