US Coinbase reported a loss of $1.1 billion in the second quarter of 2022. The company cites the “rapid and savage” declines in the crypto market as the reason. Those declines ultimately also took a serious blow to Coinbase’s trading volume and thus revenues.
Second major loss in a row
The $1.1 billion loss in the second quarter of 2022 marks Coinbase’s second consecutive quarterly loss. That amount is also the largest loss since Coinbase was listed on the American Nasdaq. The result, which surprised even the analysts negatively, was shareholder letter of 9 August shared.
“The current corrections came quickly and we see that clearly in the behavior of our customers,” Coinbase said in the shareholder letter. The second quarter of 2022 was a “tough quarter” for Coinbase, with trading volumes dropping 30 percent from normal and transaction revenue falling 35 percent.
“Both metrics have been heavily impacted by a change in our customer activity and the market, which has been driven by macroeconomic and credit factors,” Coinbase continues. With the latter, of course, they are referring to parties such as Celsius and Three Arrows Capital, whose liquidity problems caused a major blow to confidence in the market.
Large part of loss due to price falls
Much of Coinbase’s $1.1 billion loss comes from crypto asset write-downs due to price declines. For this, Coinbase had to write a negative sum of $ 446 million. To offset the drop in revenue, Coinbase already laid off 18 percent of its workforce in June and is stricter about investing in new product development.
Right now, Coinbase’s priority is Coinbase Retail App, Coinbase Prime, Staking, Coinbase Cloud, and other Web3 applications. Looking ahead, Coinbase expects the “soft market conditions” of the second quarter to continue into the third quarter. In fact, Coinbase expects a further decline in total trading volume and transactions per use.
