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 range-bound for Q1 with few opportunities for short-term traders, resulting in the exchange volume slump. Coinbase derives as much as 85% of its revenue from above industry average transaction fees, so that decline has 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 Slump
Revenues fell 35% year on year to $1.16 billion, way off analyst expectations of around $1.5 billion. The firm blamed the falling crypto markets and increased volatility in 2022 but remained optimistic for the future:
“We believe these market conditions are not permanent and we remain focused on the long term.”
Revenue derived from transaction fees still made up 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 fell from $547 billion in Q4 2021 to $309 billion for the first quarter of 2022. Of this total, just 24% were retail traders, with the vast majority being institutional. It reported that institutional trading volume was $235 billion, a decrease of 37% compared to Q4.
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 Slumps to ATL
Coinbase stock has fallen to an all-time low as a result of the worse than expected earnings report. COIN was down 16% in after-hours trading Tuesday after sliding about 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 tanked around 50% over the same period from their all-time high. Total market capitalization currently stands at a ten-month low of $1.47 trillion.