Analyst Says FTX Collapse Won’t Benefit Coinbase

• “I think crypto is dead, and I think that investing in Coinbase is just a waste of time,” Mizuho analyst Dan Dolev said on Friday.
• The Wall Street analyst doesn’t expect Coinbase to benefit from the collapse of rival crypto exchange FTX.
• Dolev said Coinbase is “a very bad business right now” as it loses $1.2 billion on $600 million in revenue.

Any Coinbase investors that thought the collapse of FTX would be a net benefit to Coinbase should temper their enthusiasm, according to Mizuho analyst Dan Dolev.

FTX was a rival crypto exchange of Coinbase, and its downfall was seen by some as a potential for Coinbase to pick up new customers and expand its crypto trading volumes.

But in an interview with CNBC on Friday, Dolev said the outlook for crypto is bleak as investor confidence hits new lows, similar to the dot-com crash in tech stocks 20 years ago.

“I think crypto is dead, and I think that investing in Coinbase is just a waste of time,” Dolev said. “The consumer is disinterested. If you go back to the dot-com bubble, it took people like five years to come back to [tech] stocks, and those were real businesses.”

The same can’t be said for the crypto world, as tokens like FTT have no underlying cashflows or assets or business activities to fall back on. Instead, the sole driver of prices, and therefore value, in crypto tokens is supply and demand, and demand is floundering.

“What we’re talking about here is these crypto tokens. What FTX told you is that one day you could be worth the world, and the second day you could be worth nothing, and I think consumers are going to be very scared,” Dolev said.

Any market share gains by Coinbase amid the FTX fiasco will be “very minimal in the greater scheme of things,” according to Dolev, mainly due to the lack of trust now found in the cryptocurrency world.

“I wouldn’t get over excited about [Coinbase market share gains], because the overall volumes are coming down. They’re [Coinbase] making like $600 million in revenue, and $1.2 billion in losses,” Dolev said. Those figures appear to be a reference to the crypto exchange’s third-quarter earnings results, in which Coinbase generated $576 million in revenue with $1.15 billion in total operating expenses and $545 million in net losses. That’s a 53% year-over-year decline in revenue.

“It’s a very bad business right now,” Dolev said. Based on Coinbase’s stock price, investors aren’t arguing. The stock is down more than 80% year-to-date and is sitting near record lows.