The negative volatility in Bitcoin (BTC) will hurt trading volumes for cryptocurrency platforms. Coinbase (COIN) faces the most pressure. The company is spending billions to build its global market share. It needs more staff and needs more cash on hand to fund its expansion.
On June 2, the company said it would pause its hiring spree for new and backfilled positions soon. Chief People Officer L. J. Brock said the ongoing crypto bear market is hurting its growth. The pre-emptive cost control is a red flag for the crypto market. It suggests that transaction volumes could dry up.
Crypto investors may convert holdings into currency and hard assets in increasing numbers. Platforms like Coinbase will no longer thrive if that trend continues. Coinbase investors need not sell shares yet. The hiring freeze will slow the growth in expenses. Unfortunately, stock-based compensation levels are still a concern.
Coinbase will reward executives with generous stock-based compensation this year. As its stock price declines, this compensation package becomes less attractive for new staff. Coinbase will have difficulty attracting talented staff.
Your Takeaway
Bitcoin and Ethereum prices will matter more for Coinbase’s prospects than its cost-saving measures. Watch for those crypto prices to hold current levels in the next few weeks before buying COIN stock.
