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Coinbase Reports Q4 Beat; 'Crypto Winter' Effect Lingers

Published 22/02/2023, 07:08 pm
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While Coinbase’s (NASDAQ:COIN) earnings report managed to beat expectations, it is still very representative of the damage the “crypto winter” caused to the industry.

After a day of decline due to an expected $600 million loss, Coinbase released its Q4 earnings report. According to the document, the exchange managed to beat expectations despite having a significantly worse performance than in the third quarter.

Coinbase Beats Revenue Estimates but Sees Trading Volume Drop 12%

Coinbase’s shares skyrocketed over 7% in the immediate aftermath of the release of the exchange’s Q4 earnings before quickly dropping just as sharply minutes later. Subsequent after-hours trading showed indecisiveness on the part of investors with the price rising multiple times before falling again and erasing gains. According to the report, the cryptocurrency exchange made $629 million in revenue, beating the expected $590 million.

Its per-share loss was also less steep than the forecast of $2.55 and amounted to $2.46. A troubling statistic came in the form of Coinbase’s transaction volume which stood at $322 million by the very end of 2022—a 12% decrease compared to the third quarter.

Coinbase’s earnings report for the last quarter of 2022 also serves to showcase how damaging the “crypto winter” has been for the sector. While its $629 million revenue did beat estimates, it is important to remember that for Q4 2021, the exchange reported $2.5 billion. Similarly, it also beat earnings-per-share estimates for the last three months of 2021—$3.32 compared to the forecast of $1.85.

Crypto-Related Firms Still Reeling From the End of 2022

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Most cryptocurrency-related firms reported a significant decrease in revenue for the fourth quarter of 2022. While the entire year has since been dubbed “the crypto winter” and has seen a significant decline across the industry, its final months proved especially difficult for digital assets.

The quarter immediately had a bad start with October proving to be a record-breaking month when it comes to digital asset theft, hacks, and exploits as it featured attacks on the BNB chain and Mango Markets, along with multiple others. In November, the situation went from bad to worse when the world’s former second-largest cryptocurrency exchange FTX collapsed.

Firms with strong ties to digital assets have for the most part reported taking a beating in Q4. For example, MicroStrategy, well known for being one of the largest holders of Bitcoin, reported a net loss of nearly $250 million, and a $197.6 million impairment on their cryptocurrency holdings. The company, however, signaled it remains bullish on BTC and has plans to continue acquiring it.

This year has so far offered cause both for optimism and pessimism. On the one hand, January saw a significant rally with most major digital assets and cryptocurrency companies going significantly into the green - the month was also Bitcoin’s second-best January in a decade.

On the other, February saw a renewed regulatory offensive that caused many to worry what the future of staking—due to the $30 million settlement with Kraken—and stablecoins—due to actions against Paxos which led it to terminate its cooperation with Binance—could look like in the U.S.

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Disclaimer: This article was originally published on The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.

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