Coinbase earnings fall in Q3 but assures investors of future growth

Karthik Subramanian

Coinbase, one of the largest crypto exchanges in the world, has announced its earnings for the quarter ending September which showed that its trading volumes have declined by 29% as compared to the previous quarter.

Its verified user base increased to 73 million while its monthly transacting users went down by 1.4 million to 7.4 million in Q3 though it is still triple the size as compared to last year. The mixed results for the third quarter have been mainly associated with the volatility in the market which was pretty low during the quarter and it was also the time when many of the cryptos were bearish as well which made the traders and investors stay away from the market. The market and the prices have picked up since then which means that the trading volumes should show an uptick for Q4 but all this simply explains how volatile this business can be and how the exchanges are highly dependent on the crypto prices and volatility for their revenue.

“Today we see 59% of our trading volume coming from other crypto assets,” Chief Financial Officer Alesia Haas said. “We don’t know precisely which asset customers are going to adopt so our strategy of wanting to support all assets will give our customers the broadest and deepest choices to use them,”

This makes the investments into such exchanges and crypto businesses a risky bet for short term traders and investors which is why the company has been advising its investors to wait, be patient and be ready for the long haul as the revenues could vary widely from quarter to quarter as it is still a maturing industry at this time. The volatility in the crypto prices leads to volatility in the share prices of crypto-based companies like Coinbase and the investors in the company need to be used to this volatility and accept it as a risk before they choose to invest in such companies.

Coinbase has expanded from being just a crypto exchange and has been on the constant lookout for other related businesses as it needs to compensate for downtimes in its trading volumes and fees and look for new avenues for more stable revenue and all this has to happen within the regulatory purview of the SEC which has been a challenge of late.

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