Coinbase, the huge American crypto exchange, achieved an impressive turnover of 7 billion dollars in 2021. However, that was the year of the bull market, which was accompanied by a lot of enthusiasm and high trading volume. Coinbase also went public in April last year.
However, we are currently in a deep, dark and cold bear market, and according to Coinbase CEO Brian Armstrong, that could mean that the company’s revenue is down by more than 50 percent.
Coinbase CEO Brian Armstrong said the exchange’s 2022 revenue will likely be cut in half or more as declining prices and the collapse of rival FTX rattle the crypto industry https://t.co/QmrBOiZykJ
— Bloomberg Crypto (@crypto) December 8, 2022
Problems for the crypto market
Armstrong tells Bloomberg that he would not be surprised if turnover in 2022 is at least 50 percent lower than in 2021. There is less trade and the confidence of the general public in the industry has been considerably damaged by parties such as Terra and FTX. Both have imploded spectacularly this year.
In conversation with Bloomberg, Armstrong indicates that this loss of revenue is in line with analyst expectations. In theory, that would mean that the stock shouldn’t fall any further once these numbers become final. That does not alter the fact that Armstrong himself is not yet sure about the exact loss of turnover.
In the interview, Coinbase’s CEO says that it is a drop in revenue of at least 50 percent. That loss of turnover can therefore be much higher than the 50 percent he mentions. On the other hand, it is also possible that he is trying to temper expectations and that we will have a surprise at the end of the quarter.
Coinbase shares down 80%
Coinbase shares have not had a happy 2022. Since the beginning of the year, Armstrong’s trading house has already lost 80 percent of its price value and in response to his statements, the stock lost another 1 percent. Based on current numbers, Coinbase expects an operating loss of approximately $500 million for 2022.
These are gigantic figures that are not hopeful about the future of the stock exchange platform. Coinbase is of course a big brand name within the industry, but it is to be hoped that they have not taken too much on their plate during the recent bull market.
That is something we mainly saw in the bitcoin mining industry, where the big boys are now falling over in droves or at least have to sell significant amounts of bitcoin to keep their heads above water. Ultimately, the trick in this industry is to operate within a certain margin of safety and limit risk in order to cope with volatility.