Source : bitcoinist.comhttps://bitcoinist.com/wp-content/uploads/2022/08/Crypto-4-640x357.png
Crypto exchange Coinbase disclosed a $1.1 billion loss on revenue of $803 million in the second quarter, a bigger-than-anticipated loss as investors apprehensive about this year’s volatility in assets avoided trading in cryptocurrencies.
Both numbers fell short of analysts’ forecasts and are below what the company reported in the first three months of the year.
This is the second consecutive quarter that Coinbase has declared a deficit, and the biggest loss since the crypto exchange launched on the Nasdaq in April of this year.
After the closing of regular trading, Coinbase shares were down about 5%. As a result of what has been termed one of the harshest “crypto winters” so far this year, the exchange has fallen by 65%.
Crypto Exchange Sees Trade Volumes Dropping
The San Francisco-based company expects trade volumes to decline further in the current quarter, highlighting the sector’s disarray caused by the failure of many crypto initiatives and a larger selloff in financial markets.
During a conference call with investors, the exchange said that a significant chunk of its $1.1 billion loss was attributable to accounting regulations that require it to take impairments when the price of cryptocurrencies declines, but do not permit it to record a gain when prices are up.
In terms of transactions, around 9 million users transacted on the site, a decrease of 200,000 compared to the previous three months. Coinbase had the same figure in the same quarter a year ago, adding 200,000 monthly active users over the course of a year.
Coinbase stated in a letter to shareholders:
“The present economic collapse came on “fast and furious,’ and customer behavior resembles that of previous bear markets.”
In an interview with Bloomberg TV, Chief Operating Officer Emilie Choi said:
“Core retail customers are ‘sitting on the sidelines’ because of the downturn.”
Tough Road Ahead For Coinbase
Coinbase’s financial pains in the quarter ending 30 June includes $446 million in impairment costs linked to investments and initiatives, the largest amount since the company became public.
The crypto exchange’s disappointing earnings announcement comes at a time when the organization is attempting to traverse an industrywide slowdown in the cryptocurrency industry, as well as assuage investors’ fears about a recent claim that the US Securities and Exchange Commission is probing the firm for illegal listing of securities.
In addition, the company experienced a huge setback last month when the US Department of Justice reported the arrest of the company’s former product manager for insider trading.
Meanwhile, the announcement that Coinbase had struck a partnership with Blackrock, the largest asset manager in the world, caused the stock price of the exchange to surge last week.
On its Aladdin platform, Coinbase will supply the financial juggernaut with cryptocurrency trading technology for institutional investors.
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