Coinbase User Base Declines In 4th Quarter Of Last Year• February 25, 2023 10:51 am • Comments
As many had expected, the number of users that were on Coinbase had declined slightly in the 4th quarter of last year due to decreased trading activity.
Trading volume declining is something that is typical during bear markets of any industry and it seems that the crypto markets is no different.
With that being said, it looks like Coinbase is one of the few major crypto exchanges that will likely survive despite the economic conditions which caused the company to do multiple layoffs.
The company had also reported a revenue of $629 million last quarter which had beat revenue estimates of $590 million which was quite positive for investors.
The question is what is Coinbase and other crypto exchanges going to expand in the mean time until the next crypto bull run arrives.
Institutional trading has been more resilient than retail on Coinbase which managed to increase its market share over the past year.
Non-fee related income also rose to 26% of net revenue in 2022 up from just 7% in 2021. pic.twitter.com/jSXouMyAKq
— Madeline ❤️🇺🇸❤️ (@buydipcrypto) February 25, 2023
Revenue plunged nearly 75% from a year earlier as the so-called crypto winter continued to drag on the price of cryptocurrencies. The company also reported a (non-adjusted) net loss of $557 million, a year after Coinbase generated net income of $840 million during the peak of crypto adoption.
Coinbase’s user base continues to shrink. The company said it had 8.3 million monthly transacting users (MTUs) during the fourth quarter, down from 8.5 million the prior period. Analysts were expecting 8.22 million, according to StreetAccount. Trading volume fell 9% to $145 billion from the previous quarter.
Transaction revenue fell 12% to $322 million from the previous quarter, which was below the $327 million consensus among analysts polled by StreetAccount.
Coinbase still remains to be one of the most relevant exchanges in the crypto industry within the United States as it adheres to many of the government regulations.
This happens to be one of the most difficult things to do given the strict requirements and regulatory uncertainty that exists within the country surrounding digital assets.
There have been some fears from investors that the SEC will start to take more aggressive action on the industry and pressure Coinbase to delist some of the cryptocurrencies.
This is because the SEC has been taking more enforcement actions recently when it comes to accusing certain digital assets of being considered unregistered securities.
As a result, this may also have the potential to decrease trading volume for Coinbase in the future, but nothing has happened yet.
Coinbase beats revenue estimates but still posts $2.6 billion loss for 2022 amid Crypto Winter https://t.co/Vhi4uXvJq2
— MythOfMoney.com (@MythofMoney) February 22, 2023
Coinbase’s business could also be impacted by possible SEC actions that would govern certain types of cryptocurrency tokens and crypto services as securities. Tweets by CEO Brian Armstrong and Chief Legal Officer Paul Grewal have suggested the company would fight any such action in court.
Crypto exchange Kraken, for example, recently ended its staking services as part of a settlement with the SEC over allegations that the platform sold unregistered securities.
Many centralized exchanges like Kraken and Gemini offer customers the option to stake their tokens in order to earn yield on their digital assets that would otherwise sit idle on the platform.
With crypto staking, investors typically vault their crypto assets with a blockchain validator, which verifies the accuracy of transactions on the blockchain. Investors can receive additional crypto tokens as a reward for locking away those assets.
Coinbase's fourth-quarter revenue beat estimates, with the exchange reporting revenue of $604.9 million compared to the $589 million FactSet estimate.https://t.co/8hWgEgoYkR
— Michael Branch (@Michael63140627) February 22, 2023
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