Coinbase faces threat from lower USD Coin market cap, analyst warns

The slump in USD Coin's ( USDC-USD ) market cap over the last couple of days represents "the most readily apparent threat" to cryptocurrency exchange Coinbase Global ( NASDAQ: COIN ), as the stablecoin remains a key revenue driver for the company, Barclays warned. On Saturday, USD Coin ( USDC-USD ) de-pegged from the U.S. dollar to an all-time low of $0.84 after Circle, the company behind the second-largest stablecoin, disclosed that $3.3B of the ~$40B of USDC reserves have been parked at failed lender Silicon Valley Bank. The drop in price was accompanied by a markedly lower market cap, falling to as low as $37.3B on March 11 from $43.6B a day before, according to CoinMarketCap data . Still, the market cap has since stabilized to $40.3B -- and the price drove up back to $1 -- after Circle said it would backstop USDC ( USDC-USD ) reserves. Despite the revival, "we see potential incremental risks to USDC itself, as the de-pegging experienced over the last few days could impact overall demand for USDC, which would be a negative for Coinbase’s P&L," analyst Benjamin Budish wrote in a March 12 note. In Q4, Coinbase ( COIN ) generated $146M of interest income from USDC ( USDC-USD ), representing around 23% of its total sales and ~27% of gross profit, he noted. In the meantime, COIN climbed 9.6% as bitcoin ( BTC-USD ) shot up some 17% to around $24K. Earlier, Coinbase disclosed that it had $240M of cash at Signature Bank .