Why did Coinbase’s (COIN) shares drop 9.5% on Thursday?

Coinbase has arguably become the most important crypto player in the US this year, as several ETF providers, including BlackRock, have chosen the platform to serve as a custodian for their Bitcoin-traded funds.

Adding to the overall bull run for the entire market has led to positive price movements for the shares, which peaked above $250 earlier this year. However, COIN fell hard on Thursday, likely due to increased competition on the ground in the area.

A company led by Brian Armstrong has become something of a monopoly on the Bitcoin ETF watchdog front, as it is among the few publicly traded crypto exchanges in the United States.

That's the first quarter of 2024 — when ETFs will launch — and its Q1 report beat expectations, showing a massive 72% increase in revenue.

Naturally, this impacted Coinbase shares, which jumped from $156 at the start of the year to a multi-month peak of $280 in late March, taking advantage of the broader crypto market resurgence and BTC's new ATH.

However, COIN started to recover along with the rest of the market in April and May but still maintained a healthy level above $200. That changed yesterday, when the stock fell 9.43% from $215 to $199.

The most likely reason for this is not related to market movements, because BTC was well in the green, reaching a 3-week high above $66,500. In fact, it may be related to the upcoming competition on the space business front in the US.

CME Group, commonly known for its involvement in Bitcoin and Ethereum futures trading, has outlined initial plans to introduce spot BTC trading services. Given the fact that CME is a well-established player in traditional finance and has a rich history in crypto, such a potential startup could take market share away from dominant powers like Coinbase and Binance.

Separately, Cathy Wood's Arch Invest has been slowly unloading COIN shares over the past few weeks, which could add to the selling pressure.