Coinbase And MicroStrategy Bonds Fall Due To FTX Collapse

Bonds issued by cryptocurrency exchange Coinbase (COIN) and MicroStrategy (MSTR), a business intelligence firm and bitcoin investor, have plummeted as investor trust in the industry has plummeted in the aftermath of FTX’s demise.

According to data provider Finra-Morningstar, Coinbase‘s bond due 2031 has plunged 15% this month to 50 US cents on the dollar, driving the yield – which moves in the opposite direction of price – to a record high 13.5%. The drop comes after nearly three months of consolidation and extends the FTX events that began earlier this year. The yield on the company’s 2026 bond has risen to 17%.

Bonds associated with MicroStrategy, a business intelligence firm and bitcoin holder, have taken a similar hit due to the collapse of FTX. The interest on the company’s 2028 notes, which were issued last year to finance bitcoin (BTC) accumulation, increased to 13.35% on Friday as the price fell to a record 72.5 cents on the dollar. On its balance sheet, MicroStrategy has around 130,000 BTC worth approximately $2.08 billion.

The debt of the corporations carries a premium of roughly 1,000 basis points, or higher, over the 10-year Treasury note rate as of Friday. A premium of that size is considered to signify credit stress in traditional markets. At the time of publication, the 10-year Treasury yielded 3.8%. One percentage point equals one hundred basis points.

“High bond yields reflect sharply higher rates, but also genuine skepticism about crypto’s long-term viability among institutional investors following the high-profile collapses of Terra Luna, Celsius, 3AC, Voyager, BlockFi, and FTX,” Mike Alfred, a value investor and founder of digital assets investment platform Eaglebrook Advisors, said.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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