Coinbase’s trading volumes fell more than 40 per cent in the first quarter, as its worse than expected earnings and bleak outlook underscored the fallout from the crypto bear market.
Shares in the largest US cryptocurrency exchange fell more than 15 per cent in after-hours trading, after the company reported net losses of $430mn, far greater than the $47mn expected by Wall Street analysts.
Revenues fell 35 per cent year-over-year to $1.2bn, missing analysts’ expectations of $1.5bn.
The company, which went public in April 2021, blamed a “continued . . . trend of both lower crypto asset prices 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 sank 44 per cent compared with the previous quarter, which it said was “consistent with the broader crypto spot market”.
Bitcoin, the most popular cryptocurrency, has more than halved in value since its peak in mid-November during what has been dubbed the “crypto winter”.
The results stand in stark contrast to previous Coinbase earnings during the bull market last summer, when its profits surpassed those of the largest, more established exchange operators including CME Group of Chicago and Intercontinental Exchange in the second quarter.
In response, Coinbase has sought to diversify its business, launching a non-fungible tokens marketplace last week in an attempt to challenge the lucrative marketplace set up by start-up OpenSea. It has also been exploring other offerings, such as crypto derivatives.
In its outlook, the company said crypto asset volatility and crypto asset prices have declined in April, and it expected users and trading volume to decline in the current quarter compared with the first quarter.
It signed off its shareholder letter with #wagmi — an abbreviation popular among the crypto community for “We are all gonna make it”.