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Coinbase shares are down about 13% over 2 weeks alongside tumbling Bitcoin

CFOTO—Getty Images

Even with gains through midday Tuesday of better than 4%, to nearly $222, shares in the cryptocurrency exchange making similar gains.

When Coinbase stock slumps it’s often a reflection of digital assets writ large given how much of the company’s revenue comes from trading fees. In the first quarter of the year, transactions made up 67% of revenue. On Monday, trading volume was $788.3 million, whereas on March 4 it was almost $3.2 billion.

“Volume has pulled back quite a bit, and the price has come back from the peak in the first quarter somewhat. So [Coinbase] is going to get lower profitability in the second quarter,” Paul Gulberg, a senior equity analyst at Bloomberg Intelligence, told Fortune.

‘A lot of noise and activity’

Over the past 30 days, Bitcoin, Ether, and Solana are down about 11%, 9%, and 18%, respectively, and each has failed to gain momentum since mid-March. A key reason is the lagging performance of the 11 spot Bitcoin exchange-traded funds, which the SEC approved in January. Since then, the price of the underlying asset, Bitcoin, has ebbed and flowed with large sums moving in and out of these products. The latest string of net outflows from the ETFs began on June 10, and they’ve continued every day, except for one, totaling around $1.3 billion, according to CoinGlass data. It’s the longest stretch of outflows since the products debuted.

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Not only do the outflows affect Coinbase because of their ties to Bitcoin, the company is the custodian for eight of the 11 ETFs, for which it receives a 0.2% fee. Outflows mean they’re holding less Bitcoin, ergo generating less revenue.

Additionally, Coinbase holds over $207 million worth of Bitcoin, making it the public company with the sixth-largest exposure. Shares of MicroStrategy, the company that holds the most Bitcoin, are down about 8% since June 12.

However, Gulberg thinks that the bigger factor in Coinbase’s recent stock drop is “sentiment,” with so many of the firm’s shares held by retail traders: “When you get a lot of noise and activity in the digital asset space, people rush into Bitcoin and Coinbase. And vice versa: When the sentiment dies and slows down, people rush out of Coinbase.”

This story was originally featured on Fortune.com