Coinbase’s $51 Billion Loss – Crypto Winter
One of Coinbase’s most anticipated stock market debuts has grown into one of the most spectacular crashes for a little over a year; it has left some analysts and investors stunned by the poor performance of the U.S. cryptocurrency exchange. The firm’s market value fell by about $51 billion; At the end of the first day of trading in April last year. Shares of Coinbase fell to an all-time low in May. After some recovery, it has shrunk by about 80% since its debut. This is a sharper drop than the 53% loss of Bitcoin over the same period.
The recent bear market and regulatory pressure on cryptocurrencies have played a significant role. Last year, lend sparked outrage from the Securities and Exchange Commission; When crypto prices have fallen in the last six months, trading volume decreased at most exchanges.
It took months for Coinbase to launch a new, irreplaceable market – then it broke down. The company missed analysts’ revenue forecasts for the first three months. This quarter has also led to a steady decline in trade volume because it has lost ground to competitors. According to the researchers, Coinbase’s market share decreased to 4.8% of the monthly crypto trading volume. Some customers have gone to competitors. Analysts estimate that Coinbase will lose about $1.4 billion this year. Some competitors’ financial performance is better maintained, and competition from other exchanges intensifies.
Coinbase and Crypto Winter
FTX revenues have not declined. According to the director, this is partly due to the long-term increase in market share; In part, the FTX has been more conservative in spending and will remain firmly net profitable this year. Some analysts believe that Coinbase’s costs are too high. The company recently announced it would slow down hiring. It may also stop the expansion of sales and support staff.
Coinbase supports at least one part of its diversification strategy, allowing people to earn income on digital coins. The company’s new NFT market has not attracted much attention, which should grow through a new revenue stream. After attracting $75,000 in trading volume when it opened to all customers, activity declined since May 19, when volume reached just $17,000.
According to analysts, the company has a dual problem: it is not profitable consistently and in crypto, which is also an area that the market does not like today. They estimate that if it is just a mild crypto winter, the firm might withstand the storm. It depends on how’s the situation of crypto and bitcoin.
