Cryptocurrencies have taken a beating this year. As Gizmodo reports, many have lost up to half their value in the past six months alone. But the beating crypto will take in 2022 will affect more than just the digital coins themselves. In the wake of Coinbase’s most recent quarterly results, we now know that some crypto trading platforms are also underperforming.
Yesterday after the bell, Coinbase Global (Nasdaq:COIN) announced its first quarter 2022 profit. The results were not good and the COIN stock plummeted. At the time of writing, COIN is down more than 14.5% in pre-market trading to $62.33. That’s an all-time low for Coinbase, which peaked at just over $319 last October. The company went public just over a year ago in a much-hyped IPO, the first major crypto exchange to be listed on US markets.
So what caused COIN stocks to crash? As CNBC reports, sales were down 27% from a year ago. That decline was led by fewer users placing crypto transactions on the platform. Monthly retail transaction users (MTUs) fell from 11.4 million in the previous quarter to 9.2 million in Q1 2022. That loss in trading volume fits into the difficult year cryptocurrencies have had. When people see crypto prices crash, they will be more reluctant to invest in digital currencies.
As for Coinbase’s thoughts on the state of the general industry, the company said in its shareholder letter that further investment was critical. That is why it is as important for us as ever to continue investing in our three strategic pillars: crypto as an investment, crypto as a new financial system and crypto as an app platform. “We are at a point in our evolution where we need to continue investing to drive growth and help our industry grow. At the same time, we will monitor market conditions closely to ensure that we invest our resources as responsibly and wisely as possible. We took steps last year to strengthen our balance sheet, and while the short term may be choppy, we intend to invest cautiously to increase shareholder value over the long term.”
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