Coinbase’s trading volumes fell more than 40% in the first quarter as its worse-than-expected earnings and gloomy outlook underscored fallout from the crypto bear market.
Shares of the largest US cryptocurrency exchange fell more than 15% after hours after the company announced net losses of $430 million, well above the $47 million expected by investors. Wall Street analysts.
Revenue, the majority of which comes from trading fees, fell 35% year-over-year to $1.2 billion, missing analysts’ expectations of $1.5 billion.
The company, which went public in April 2021, blamed a “lawsuit. . . trend of both crypto asset price declines and volatility that began in late 2021,” adding, “We believe these market conditions are not permanent and we remain focused on the long term.”
Trading volumes fell 44% from the prior quarter, which he said was “consistent with the broader crypto spot market.” Monthly transacting users – defined as those who made an active or passive transaction in the last month – fell to 9.2 million, down nearly 20% from the previous quarter.
Bitcoin, the most popular cryptocurrency, has more than halved its value since peaking in mid-November during what has been dubbed “crypto winter.”
The rout comes as recent interest rate hikes have prompted investors to flee riskier corners of global financial markets. As the fervor for speculative investing cools, the market value of the top 500 digital assets has halved from a record high set in November 2021 at $1.6 billion, according to CryptoCompare data collated by the Financial Times.
Coinbase’s results stand in stark contrast to previous earnings during last summer’s bull market, when its profits surpassed those of the largest and most established exchange operators, including CME Group of Chicago and Intercontinental Exchange in the second quarter. .
In its outlook, the company said crypto asset volatility and crypto asset prices declined in April, and it expected users and trading volume to decline in the current quarter compared to the previous quarter. first trimester.
In response, Coinbase has sought to diversify its business, launching a non-fungible token market last week in a bid to challenge the lucrative market set up by start-up OpenSea. He also explored other offerings, such as crypto derivatives and “staking products” — a way to earn rewards for holding certain digital coins — and invested heavily in his Coinbase wallet.
Despite the bleak outlook, company executives insisted on calling on analysts to remain unfazed by the recession.
“We tend to look at slow times as great opportunity because we’re greedy when others are scared,” said Brian Armstrong, chief executive of Coinbase. “We tend to be able to pick up great talent during these times – others pivot, they get distracted, they get discouraged – and so we tend to do our best during slow times.”
The company signed its shareholder letter with #wagmi – a popular abbreviation among the crypto community for “We’re all going to make it happen”.