(COIN) Archives

Kowtows to the Institutions

Google allowing crypto payments to its cloud services from Coinbase Global (COIN) doesn’t move the needle.

COIN is the crypto exchange platform that has run into a litany of problems recently, from falling trading volumes and regulatory fines to shifting strategic focus.

The news is a footnote to the carnage that is really happening front and center in the crypto market.

Funnily enough, why would a customer choose to pay for Google’s cloud services through Coinbase when fees are still meaningful and alternative rails (cards, bank transfers) dominate?

Crypto isn’t cheap, and it doesn’t pretend to be.

Ether (ETH) remains infamous for its “gas fees.” In 2021, they averaged around $63 for one transaction, which contributed to its lag behind other networks.

In 2025, the network has improved (via upgrades like Dencun and protocol optimizations), but fee-peaks still occur and many users have migrated to layer-2s or alternative chains.

Bank ACH transfers are free or very low cost, and so are most debit/credit card purchases.

Even though El Salvador claims to be a crypto-first economy, most everyday transactions continue to be completed in cash or U.S. dollars.

At least crypto will now be allowed to transact on Google’s platform (or at least participate via some rails), which is a victory in itself, but I don’t believe this will catch on like wildfire.

Crypto is up against a Sisyphean task.

The Google Cloud infrastructure service will initially accept cryptocurrency or crypto-adjacent payments from a limited set of customers; the roll-out is far from universal. Meanwhile, Google has pivoted toward broader payments infrastructure, agentic AI commerce and blockchain layers.

Over time, Google may allow more customers to make payments via crypto or stablecoins but the emphasis is no longer solely “pay with Bitcoin/Ether” but “use stablecoins or tokenized rails.”

Coinbase will (or already does) earn a percentage of transactions that go through whatever rail they enable but the margin of that business remains tiny relative to its overall operations.

It remains high risk to hold crypto on the balance sheet. Coinbase no longer flags a large impairment charge the way it did in 2022, but it continues to grapple with volatility and shrinking core trading revenue. In Q2 2025, Coinbase’s revenue fell to about $1.5 billion, with consumer spot trading volumes down ~45% year-over-year.

Therefore, I expect Google (or Google’s payment rail) to charge a fee or apply a conversion spread to turn crypto in and out of fiat - just as before - or to prefer stablecoin/fiat rails entirely.

From the outside, this really does look like a marketing gimmick.

Blockchain technologies, such as non-fungible tokens (NFTs), have moved out of the “wild hype” phase; for Google’s cloud division the bigger focus now is on tokenized assets, stablecoin infrastructure, AI-agent payments, and building developer tools around these.

Google has announced the Agent Payments Protocol (AP2), an open standard for AI-agent-led payments that supports stablecoins among other rails.

Previously, Google pushed for growth in major industries such as media and retail. This year, it started forming more teams around blockchain, payments infrastructure and “Web3” tooling but the narrative has shifted from “crypto payments” to “tokenized finance + AI commerce.”

However, I thought that crypto was going at its lone-wolf style hoping to create a parallel system to the fiat money system which it despises.

Apparently not.

Tying up with a mega-tech corporate firm sounds like they are giving up to me.

It seems as if the founding investors are ready to cash out and leave the die-hard crypto believers for a more stable income stream.

Annuity-like income stream is something many crypto firms lack and locating one is a hard sell.

Crypto was supposed to be “decentralized” but this appears to be a move that will offer Google the keys to Coinbase’s data while limiting them to lateral moves.

In short, this is a move that allows more centralization in the biggest crypto platform in the United States.

Growth was crypto’s calling card and that means parabolic growth possibilities are over.

Integrating with Google also means Google will have deep insight into how they can use Coinbase to profit from digital currencies - since Coinbase has agreed to onboard their data onto Google’s cloud infrastructure in some capacity.

Honestly, this is a bone-head strategic move for Coinbase, and my inclination would be to buy Google’s stock if one believes in crypto.

Desperation can trigger some unusual moves and we are seeing that in real time. But analyzing the bleak short-term prospects for crypto, this might be a move for survival rather than anything else.

September 15, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
September 15, 2022
Fiat Lux

Featured Trade:

(PICKING A FIGHT WITH GARY)
(BTC), (IRS), (SEC), (COIN)

Picking A Fight With Gary

Bitcoin Letter

Chairman of the SEC Gary Gensler is not hiring 87,000 new SEC agents who will form the backbone of the SEC and “carry a firearm and be willing to use deadly force, if necessary.”

No, that’s the Internal Revenue Service (IRS) but the SEC is starting to trend in that direction in regard to how it views the crypto industry.

We aren’t at the point of the SEC raiding crypto exchanges. That stuff only happens in places like Palm Beach, Florida.

Gensler’s recent message to crypto has essentially been to get with the program or face a tortuous existence.

His defiant message appears to be falling on deaf ears as the crypto industry has felt they should be entitled to a new set of lenient rules than conventional assets.

I can tell you this has worked out quite poorly for crypto companies who have willfully placed a bullseye squarely on their forehead.

In a recent speech, Gensler criticized the crypto industry, telling an audience of lawyers that the “vast majority” of the nearly 10,000 existing crypto tokens are securities, being issued to the public in violation of federal laws.

He argued that through statements and dozens of enforcement actions, the SEC has made clear how existing law applies to the industry and that no such rules are forthcoming.

Gensler said investors deserve disclosure to help them sort between investments that they think will either flourish or flounder.

The SEC has been adding to its enforcement staff dedicated to protecting investors in the crypto market, announcing in May that it was adding 20 new positions in the newly named Crypto Assets and Cyber Unit, nearly doubling its size.

Crypto infrastructure companies have knowingly avoided the law and SEC as securities exchanges and broker-dealers by failing to properly register while continuing business as usual.

They also believe the products sold aren’t “securities” in the way that the SEC believes they are.

In their world, tokens are like gaming chips or collector’s cards.

We have a word for what they are doing in the English language – illegal.

Coinbase Global Inc. (COIN), the largest publicly traded crypto exchange, said in its most recent quarterly report that the company is under investigation by the SEC, and has received a list of questions about how it chooses which digital assets to list and how it classifies them.

The SEC brought charges in July against a former Coinbase product manager for insider trading, identifying nine tokens it alleges are securities, which were listed on the exchange. Coinbase has said that it disagrees with the SEC’s classification.

In February, the crypto lending platform BlockFI agreed to pay a $100 million for failing to register with the agency.

Gensler said that the SEC will have to come up with new procedures for registering crypto exchanges because they also offer custodial and broker-dealer services, unlike typical stock market exchanges.

I understand that some of these crypto exchanges are a little different from what some of the retail stock exchange platforms are selling, but skirting the law now just means the penalties will be even harsher down the road.

This is not the era of Facebook when the internet police had no idea what was going on with them.

It took decades for sentiment to shift against big tech.

However, from inception, crypto has been unable to shake the stereotype of being a fly-by-night operation and large swaths of it sure appear to be sketchy and they are policed as such.

The brand damage is immense causing the incremental investor to abstain from crypto and the regulators to clamp down even further on crypto companies and products.

We are seeing this in real-time.

The regulation is a footnote on a bull run on the way up, but now crypto has shot itself in the foot and is having a hard time convincing new investors into the asset class precisely because of a loss of trust.

July 21, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
July 21, 2022
Fiat Lux

Featured Trade:

(HOW TO SET UP A CRYPTO TRADING ACCOUNT)
(BTC), (COIN)

How To Set Up a Crypto Trading Account

Bitcoin Letter

I get many inquiries asking me how to set up an account to buy Bitcoin (BTC) and so it’s gotten to the point where I will walk new readers through the process of setting up a cryptocurrency account at Coinbase (COIN).

The signup process is actually highly straightforward and only takes minutes.

Why sign up for Coinbase?

This is an exchange that is highly popular and already has a large customer base.

Investors who can’t stomach the higher risk of exposing capital to an unregulated exchange should just dabble in bitcoin-connected ETFs which is completely reasonable.

Due to a spate of recent crypto exchange bankruptcies, some might be hesitant to get their capital tied up in bankruptcy hearings, but it’s my job to let readers know this option is out there.

COIN is still a major part of the crypto infrastructure.

Readers just only invest as much as they are willing to lose in crypto due to its higher than median volatility and underperformance the past 10 months.

Let’s get this party started.

1)

As many might assume, one must open their browser and head to www.coinbase.com to kick off the process. Once there — you’ll be greeted by an interface where the right choice is to click “sign up” in the upper right corner.

2)

A screen box pops up requiring personal information which is basically a full name, email address, password, and state. I am also assuming the user is from the United States. After clicking the agreement that the user is 18 years or older and consenting to the user agreement, click “Create account.”

3)

Technically, an account has now been created and a screen pops up offering $5 of Bitcoin if one verifies a photo ID which is completely optional. The screen let me know that it was a “limited time offer” so this offer might be gone when others sign up or it might still be there. Either way, click “Continue.”

4)

After the creation of the account, the next step is to click the verification link in the email that was provided. Simply go into the email inbox given, open the email, and click “Verify your email address.”

5)

The next step is to provide a phone number for a two-step verification. This added level of security, makes it so it’s difficult to use your account without your phone number. Select the country, enter the phone number, then click “Send code.”

6)

Enter correct authentication code sent to the phone number provided then click “Submit.”

7)

Select citizenship of the account holder then click “Submit.”

8)

Verify identity by filling in personal information including full name, date of birth, street address, city, last 4 digits of social security’s number, and zip code. Then answer a few more questions about what you will use Coinbase for, source of funds, and employment status then you’re good to go.

9)

The last step of verifying your info are two questions asking the user “How much do you expect to trade per year?” and “What industry do you work in?”

After you answer these two, then click “Submit.”

10)

That was the last of the personal questions and after clicking submit, the new user is directed to the trading interface showing a portfolio balance of $0.00. The next step is to click “Add payment method” in order to divert some fiat currency into the Coinbase account.

11)

There are different options available, and I personally chose “Bank Account” for its ease of use and free fees.

12)

A box pops up asking me to agree to the Plaid End User Privacy Policy. This is software that links Coinbase to your bank account.

For anyone who doesn’t want that linked, I would advise using one of the other three options.

Click “Continue” to proceed.

13)

Select your bank — provide your bank information.

14)

Bank Account is now linked — immediately buy any cryptocurrency available on Coinbase. Pat yourself on the back for a job well done!

July 5, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
July 5, 2022
Fiat Lux

Featured Trade:

(CRYPTO INFRASTRUCTURE HANGING BY A THREAD)
(COIN), (VAULD), (BTC)

Crypto Infrastructure Hanging By A Thread

Bitcoin Letter

Get your digital coins off Coinbase (COIN) asap. That’s the big takeaway of another crypto platform freezing.

I told you this could happen again, and it did.

This is yet more unwanted optics for the digital gold and its pitiful infrastructure whose bellwether coin crashing down to $19,500 has kicked up an avalanche of system risk.

This asset class simply will not have a future if crypto exchanges, lenders, middlemen, stablecoins, and the broad network just freezes after customers want their money back.

We need to put this under the category of not good enough.

Delivering back funds upon a requested withdrawal is the cornerstone of trust for any industry.

Crypto is failing miserably at basic safeguarding of funds and they have nobody to blame but themselves as crypto lender Vauld on Monday paused all withdrawals, trading, and deposits on its platform and is exploring potential restructuring options.

The shake-out is clearly not over and it’s really who’s guess to which crypto company is next.

Vauld CEO Darshan Bathija said on Independence Day that the company is facing “financial challenges” due to “volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate” which has led to customers withdrawing more than $197.7 million from the platform since June 12.

Many future investors won’t invest in any crypto risk assets if the CEO says one day everything is perfect and a few days later the platform is down.

It’s flat out misleading.

This is certainly a black eye for the “decentralized” thesis that has morphed into a money confiscation operation which will damage long-term trust and accountability of the asset class.

In the next bull market, if there is another one, many investors will remember when multiple lenders and exchanges froze funds when Bitcoin went down in price.

So apparently these platforms only work for the customer if crypto is going up.

The ridiculousness then leads to investors to question at what percentage sell-off is their crypto broker going to pull the rug and screw them over.

This is why many conservative investors gravitate towards regulated market with cash flow which crypto certainly is not.

Also, insurance is another massive failure precisely because it’s unregulated.

This will ostensibly turn into a big negative feedback loop with systemic risk attracting government regulators causing Bitcoin to drop further and then inviting another wave of regulators on top of the first round of regulators.

Who wants to be a part of that circus?

Pushing the false narrative that regulation is akin to communism and that centralized money is the worst thing out there has really come back to bite the crypto community.

The industry was clearly overhyped when it didn’t need to be.

Crypto clearly needs a reset after many of the companies that surround the ecosystem are in panic mode because of insolvency issues.

It’s almost as if the only thing working is Bitcoin itself and nothing else.

Just like the health and military crises which really exposed the thoughts and values of individual people, the rise in interest rates has exposed crypto as not as good as first advertised.

June 28, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
June 28, 2022
Fiat Lux

Featured Trade:

(COINBASE LICKS ITS WOUNDS)
(BTC), (COIN)

Coinbase Licks Its Wounds

Bitcoin Letter

The crypto exchange Coinbase (COIN) which is one of the biggest in the market offers us a glimpse into the crypto world by default because of the earnings reports they deliver via the public markets.

Its stock price is down 75% since it came public mirroring the plight of its bellwether coin Bitcoin (BTC).

Many people I talk to get peeved at how stocks usually perform once they go public.

Going public for COIN has meant going ex-growth and a nasty drop in valuation for investors.

To say COIN has underperformed the market is an understatement.

They went public around the euphoria of the Bitcoin rise to $65,000 and the aftermath has been brutal.

COIN continues to be hit with rafts of analyst downgrades even after being down 75% and that’s how bad the analyst community views the stock.

No dead cat bounce or no reversion to the mean for COIN!

Not only are crypto prices down across every coin that is relevant, but crypto traders have thrown in the towel.

COIN doesn’t charge trading fees, but they do sell the customer order flow to high-frequency trading firms that profits from retail orders.

The spiral downwards is like a self-fulfilling prophecy with orders drying up resulting in staff layoffs and rescinding already agreed upon new hires resulting in low morale grappling with negative revenue growth.

Cost will need to come down fast because the market won’t be favorable to the guidance of next quarters’ earnings report.
COIN quickly became the equities market poster child for the boom in digital currency prices last year with the largest US cryptocurrency exchange seeing its value surge above $75 billion as Bitcoin hit a record high, but I do believe upcoming regulation will force their business model down the drain.

Also, when a company’s customers become impoverished by losing boatloads of money in the very market the company makes a market for, the future doesn’t sound too appealing to investors.
The once $75 billion company is most likely worth $5 billion today and if customer order flow is made illegal, which the SEC is trying to achieve, then the company is worth $100 million at best maybe not even that.

Heightened competition from other firms has also undermined the stock.

Earlier this month, Binance revealed that it would be offering zero-fee trading for Bitcoin and said it had plans to also eliminate fees on other tokens in the future.

COIN still has an expense outlay of $1.7 billion to shave down.

As Bitcoin hangs on for dear life at $20,000, it could be a death blow once Bitcoin sells off to $12,000.

Much of the synergies that triggered its meteoric rise are gone and the dip buyers have vanished.

I do believe that selling rallies is most likely the best strategy right now in Bitcoin.

The public reports from the exchanges couldn’t be worse and then one must question will COIN also institute a withdrawal freeze like others have if capital bleeds uncontrollably?

A withdrawal freeze is the antithesis of decentralized money and I do believe there are a lot of alienated folks out there who believe in crypto but were highly disappointed by the first 6 months in 2022.

$12,000 appears as the natural reversion point as $20,000 has gone from support to resistance on a technical level.

June 3, 2022

Diary, Newsletter, Summary

Global Market Comments
June 3, 2022
Fiat Lux

Featured Trade:

(JUNE 1 BIWEEKLY STRATEGY WEBINAR Q&A),
(AAPL), (GOOGL), (MSFT), (JPM), (BAC), (C), (UUP), (FXA), (FXC), (EEM),
(VIX), (CRM), (AAPL), (TSLA), (COIN), (EDIT), (CRSP), (LMT), (RTX), (GD)

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