Coinbase swings to quarterly loss as crypto winter hits trading volumes
1 min read 22 Feb 2023, 03:41 AM ISTCoinbase reported net revenue of $605 million in the quarter, compared with $2.49 billion a year earlier
PremiumCoinbase Global Inc reported a loss for the fourth quarter on Tuesday, as trading volumes at the cryptocurrency exchange came under pressure from an industry-wide downturn triggered by a string of high-profile bankruptcies.
Shares in Coinbase, which lost roughly 86% of their value in 2022, were down about 2% in extended trading after results.
The market for digital assets has suffered from dour sentiment over the last year, as investors shunned risky assets amid spiraling market volatility and worries of an upcoming recession.
But the biggest blow to the sector came from the bankruptcy of Sam Bankman-Fried's major crypto exchange FTX in November. The collapse has since drawn tough global regulatory scrutiny on companies operating in the crypto sector and fueled worries of a contagion hitting other firms.
Trading volumes at the crypto exchange in the fourth quarter plunged to $145 billion, compared with $547 billion a year earlier.
"As macroeconomic indicators like inflation remained high and interest rates rose throughout the year, crypto market cap declined along with broader equity markets," Coinbase said in a letter to shareholders, adding that conditions worsened due to the depegging of TerraUSD and collapse of FTX.
Retail traders, who had earlier used Coinbase's platform to pump money into the biggest cryptocurrencies such as bitcoin and ethereum, pulled back significantly, spooked by heavy market volatility, with their trading volumes in the quarter plummeting nearly 89% to $20 billion.
The company reported net revenue of $605 million in the quarter, compared with $2.49 billion a year earlier.
Coinbase reported a net loss of $557 million in the three months ended Dec. 31, compared with a profit of $840 million a year earlier.
In January, Coinbase had said it will cut 20% of its workforce, as part of a restructuring plan that marked the third round of layoffs for the cryptocurrency exchange since last year.
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