“The current downturn came fast and furious, and we are seeing customer behavior mirror that of past down markets,” Coinbase said.
Coinbase Global (COIN) – Get Coinbase Global Inc Report posted a wider-than-expected second quarter loss Tuesday as crypto transaction volumes slumped amid the ongoing slide in bitcoin and other digital tokens.
Coinbase said revenues for the three months ending in June fell 31% from last year to $803 million, well shy of the Street consensus forecast of $832.2 million, as retail trading volumes fell 38% to just $74 million. The group also posted a wider-than-expected loss of $4.98 per hare, compared to a $3.45 per share profit over the same period last year.
Overall trading volumes were down 53% from last year to $217 billion, Coinbase said, amid what it described as ‘behaviour that mirrors that of past down markets’.
Bitcoin, which accounts for around a quarter of Coinbase trading volume, has fallen by around 66% since reaching an all-time high of $67,802.30 in November of last year, while the Nasdaq Composite index is down around 22.1% from its November 19 peak.
“Q2 was a test of durability for crypto companies and a complex quarter overall,” the company said in its quarterly letter to shareholders. “Dramatic market movements shifted user behavior and trading volume, which impacted transaction revenue, but also highlighted the strength of our risk management program.”
“The current downturn came fast and furious, and we are seeing customer behavior mirror that of past down markets,” the letter added. “During these down markets, we remain focused on building great products, while we typically see more casual competitors step back.”
Coinbase shares were marked 2.3% lower in after-hours trading immediately following the earnings release to indicate a Wednesday opening bell price of $85.65 each.
Coinbase is also being challenged by a move from its main cryptocurrency platform rival, BinanceUS, to eliminate trading fees for day-to-day bitcoin transactions
BinanceUS, an arm of the word’s biggest digital currency exchange, now allows users to trade bitcoin, the biggest cryptocurrency, against assets such as the U.S. dollar, tether, and other dollar-backed stablecoins for free, eliminating its prior levy of 0.1% on transaction valued at less than $50,00.