The exchange’s trading volume fell around 44% between January and March as it reported worse-than-expected earnings for the period.
Crypto markets were largely rangebound in the first quarter, with few opportunities for short-term traders, resulting in a slump in exchange volume. Coinbase derives up to 85% of its revenue from transaction fees, which are above the industry average, so this drop directly impacted earnings for the period.
On May 10, the company reported net losses of $430 million, far more than the $47 million expected by Wall Street analysts, according to the Financial Times.
Collapse in Coinbase earnings
Revenue fell 35% year over year to $1.16 billion, well below analysts’ expectations of around $1.5 billion. The company blamed falling crypto markets and heightened volatility in 2022, but remained upbeat about the future:
“We believe these market conditions will not last and we remain focused on the long term.”
Transaction fee revenue still made up the lion’s share at 87%. The rest comes from subscriptions and services.
The key number of monthly active users (MTU) was down to 9.2 million, down nearly 20% from the fourth quarter of 2021. It was also below analysts’ expectations of 9.5 million. Earlier this month, CEO Brian Armstrong predicted that there will be 1 billion crypto users in the next decade.
Trading volume on the platform declined from $547 billion in Q4 2021 to $309 billion in Q1 2022. Of these, only 24% were retailers, with the vast majority being institutional. Institutional trading volume was reported to be $235 billion, down 37% from the fourth quarter.
The number of assets on the platform also fell by 8% over the period. At the end of the first quarter, funds on the platform were $256 billion compared to $278 billion at the end of the fourth quarter. “The sequential decline was driven by lower crypto asset prices, partially offset by billions of dollars in net inflows,” the report explained.
COIN falls on ATL
Coinbase stock has fallen to an all-time low on the back of the worse-than-expected earnings report. COIN is down 16% after the close on Tuesday after falling around 13% in the regular session.
The stock price is currently at $61.55, according to MarketWatch. It now has 84% of its all-time high fueled by over $400 when it went public in April 2021.
Crypto markets are down around 50% from their all-time highs over the same period. Total market cap is currently at a 10-month low of $1.47 trillion.
Source: Crypto News Deutsch