Fears of inflation and recession are weighing on the crypto market
Coinbase is shedding jobs to weather a possible prolonged economic downturn
Binance.US Drops Fees on Certain Spot Bitcoin Trades
Fears of inflation and recession: crypto market under pressure
The crypto market is currently under a lot of pressure due to the high level of inflation, the attempt by the central banks to fight it with determination by raising interest rates, the resulting fears of a recession and the increasingly risk-averse behavior of investors. The most popular and largest cryptocurrency by market capitalization, Bitcoin, has suffered sharp losses since the beginning of the year and only recently fell below the US$ 20,000 mark at times. Numerous other coins are also showing poor performance this year.
But in addition to the cryptocurrencies themselves, some companies from the industry are also under noticeable pressure. The largest US crypto exchange, Coinbase, recently announced that it wanted to drastically reduce its number of employees in the middle of the crypto crash. Coinbase CEO Brian Armstrong said the focus is on cutting spending to survive a prolonged economic downturn, Deutsche Presse-Agentur reports. Since crypto exchanges like Coinbase earn their money through fees on transactions with Bitcoin and Co., business suffers when there is a slump in trade, as is currently the case.
Binance.US Drops Fees on Certain Spot Bitcoin Trades
The Coinbase share has already fallen by more than 76 percent on the NASDAQ this year (as of the closing price on June 23, 2022). In the last four weeks alone, the paper lost around 16 percent in value. After the news that Coinbase wanted to significantly reduce its number of employees, which temporarily caused the share to collapse by around six percent on June 14, the next bad news followed this week: competitor Binance.US announced, as CNBC reports, certain trading fees for customers to drop. As a result, Coinbase shares ultimately lost nearly 10 percent to $51.91 on Wednesday.
Binance.US, the US subsidiary of Binance, the world’s largest crypto exchange by trading volume, said it will allow users to make spot bitcoin trades for the US dollar and stablecoins Tether, USD Coin and Binance USD , without having to pay spot trading fees.
Meanwhile, Coinbase has historically relied heavily on trading volumes to generate revenue, according to CNBC. In recent months, however, the company has tried to diversify its revenue streams. It is currently testing the subscription service Coinbase One, which would give customers access to fee-free trading for up to $10,000 in transactions per month.
The phenomenon of fee-free trading
After some major stock brokers made the move to commission-free online trading, such as Charles Schwab, Fidelity Investments, E*Trade Financial, Ally Invest, Interactive Brokers, and trading app Robinhood, which first introduced the phenomenon, fee-free trading is now hitting the streets the cryptocurrency world, reports CNBC, as more and more investment platforms focused on bringing stocks and crypto trading experiences together in one place. Similarly, Robinhood, which had its beginnings in retail stock trading, has also begun allowing its clients to trade cryptocurrencies, while cryptocurrency exchange FTX US last month unveiled plans to introduce commission-free stock trading – and there are a few more providers, such as Block with its Cash App, which allows investors to trade stocks and cryptos in one place.
So it’s hardly surprising that Binance.US is also working on offering its users – at least partially – fee-free trades for the time being. Perhaps Coinbase can soon follow suit with its own model, such as “Coinbase One”.
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