Coinbase posts loss as cryptocurrency market turmoil hits trading volumes

The company expects trading volumes to fall further in the current quarter

Coinbase posts loss as cryptocurrency market turmoil hits trading volumes
Even though operating expenses surged 37%, Coinbase lowered its annual expenses forecast for technology, development and administration to between four billion dollars and $4.25 billion

Coinbase Global Inc reported a larger-than-expected quarterly loss as investors worried by this year’s rout in risky assets shied away from trading in cryptocurrencies, sending its shares down 6% after the bell on Tuesday.

Trading volumes at the cryptocurrency exchange more than halved to $217 billion in the second quarter, with retail participation sinking 68% and institutional trading falling 46%.

Coinbase said it expects trading volumes to fall further in the current quarter, underscoring the turmoil brought to the sector by the collapse of certain crypto ventures and a broader selloff in financial markets.

That downturn has sent bellwether bitcoin 50% lower in 2022, forced several companies including Coinbase to cut jobs and raised fears of a drop in interest from small traders.

Coinbase said its monthly transacting users fell 2% sequentially to 9 million in the April-June quarter.

“Coinbase did not see a mass migration off its platform during the quarter, but its users are becoming more passive in their cryptocurrency investing,” said Michael Miller, equity analyst at Morningstar Research.

That could be a material drag on Coinbase’s earnings as the company generates most of its revenue from trading fees, Miller added.

Adjusted loss was $4.76 a share in the quarter, compared with the $2.65 expected by analysts, according to Refinitiv data. Revenue fell 63%, missing market expectations.

Even though operating expenses surged 37%, the company lowered its annual expenses forecast for technology, development and administration to between $4 billion and $4.25 billion, from $4.25 billion to $5.25 billion. “The reduction is unlikely to restore profitability at current revenue generation levels,” Miller said.

Also read: What is the GameFi ecosystem

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