The exchange’s trading volumes fell around 44% between January and March as it reported worse than expected earnings for the period.
Crypto markets were largely constrained for the first quarter, with few opportunities for short-term traders, which led to a drop in trading volume. Coinbase derives up to 85% of its revenue from above-industry-average transaction fees, so the drop directly impacted its profit for the period.
On May 10, the company reported net losses of $430 million, far greater than the $47 million expected by Wall Street analysts, according to the Financial Times.
Coinbase revenue decline
Revenue fell 35% year on year to $1.16 billion, well short of analysts’ expectations of around $1.5 billion. The firm blamed falling crypto markets and rising volatility in 2022, but remained optimistic about the future:
“We believe these market conditions are not permanent and we remain focused on the long term.”
Revenue from transaction fees still accounted for the lion’s share of the total at 87%. The rest came from subscriptions and services.
Its crucial monthly transacting users (MTU) figure had fallen to 9.2 million, which is nearly 20% lower than in Q4, 2021. This was also lower than analyst expectations of 9.5 million. Earlier this month, CEO Brian Armstrong predicted that there will be a billion crypto users in the next decade.
Trading volume on the platform grew from $547 billion in the fourth quarter of 2021 to $309 billion in the first quarter of 2022. Of this total, only 24% were retail traders, with the vast majority being institutional. He said institutional deal volume was $235 billion, down 37% from the fourth quarter.
The number of assets on the platform also fell by 8% for the period. At the end of Q1, funds on the platform were $256 billion, down from $278 billion at the end of Q4. “The sequential decline was driven by lower crypto asset prices, partially offset by billions of dollars in net inflows,” the report explained.
COIN drops to ATL
Coinbase stock fell to an all-time low following a worse-than-expected earnings report. COIN was down 16% in after-hours trading on Tuesday after slipping around 13% in the regular session.
The share price is currently $61.55, according to MarketWatch. It has now tanked 84% from its all-time high of over $400 when it went public in April 2021.
Crypto markets have fallen around 50% over the same period from their all-time high. The total market capitalization currently sits at a ten-month low of $1.47 trillion.
