Coinbase Global Inc reported a loss for the fourth quarter on Tuesday (Feb 21), 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 spiralling 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 US$145 billion (RM642.7 billion), compared with US$547 billion a year earlier, Reuters reported.
“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 US$605 million in the quarter, compared with US$2.49 billion a year earlier.
Coinbase reported a net loss of US$557 million in the three months ended Dec 31, compared with a profit of US$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.
