On November 4, Coinbase revealed the availability of the organization’s shareholder letter for Q3 of 2022. The article states that $COIN reported a net loss of $545 million for the quarter.
The third quarter of Coinbase, according to the shareholder letter, was unremarkable. Nevertheless, the firm noticed a huge boost in their subscription and services income as an outcome of their engagement in the USDC ecosystem and higher staking activity. The letter further mentioned that a Q&A session would be held for the financial results for the third quarter of 2022.
The company claims that increased macroeconomic and cryptocurrency market challenges, in addition to a change in trade volume overseas, had a significant negative effect on income from transactions.
Although the company maintained that macro difficulties were beyond its influence, it remained focused on the factors that were under its control, including reducing operating expenses and honing its product emphasis to provide experiences that are exceptional to clients.
Looking down the road, the company is quite excited about the pace and innovation they expect in both their own line of products and the sector as a whole, in addition to the partnerships they just revealed with BlackRock and Google, based on the letter. Moreover, the letter noted that “Although we are dealing with three challenges, Q3 was another challenging quarter. By focusing on non-investment products, we are able to keep our core retail and institutional clients and assets.”
The Fed Funds Rate rose to its peak point in 14 years, consumer prices went up at their record pace in four decades, and a number of macroeconomic and geopolitical variables, especially the Russia/Ukraine War, had a major effect on both financial and crypto markets this year, according to the firm’s letter.
Although the firm purports to have seen a correlation with price movements in cryptocurrencies and an overall fall in risk-taking behavior in 2022, crypto markets have rarely been linked to macroeconomic factors.
As per Coinbase, the daily average market cap for cryptocurrencies fell 35% and 32%, correspondingly, from the second to the third quarter due to price declines that have been occurring for the past year. The average decline in cryptocurrency prices in the third quarter was a range-bound decline. This resulted in the lowest degree of volatility for crypto assets in the third quarter since 2020, which had a significant impact on the trading volume of consumers.
The company further asserts that, although they still retain a strong market share on US-friendly platforms, the preponderance of crypto trading has been moving further away from these exchanges. For example, based on the company, when only US-enabled activity is taken into account, the monthly volume of cryptocurrencies traded on the global spot market plummeted by over 50% in September 2022 versus January of the same year.
The business notes that these difficulties had an impact on their trading volume in the third quarter. $159 billion was the overall trading volume for the third quarter, which is a 27% decline from the total of the second quarter.
The overall volume of cryptocurrencies exchanged on the spot market across the globe dropped by 14% in the third quarter compared to the second quarter nevertheless. Retail trading volume decreased by 43%, and institutional trading volume decreased by 22% concurrently in the third quarter. Specifically, based on the report, $COIN saw a 545 million net loss. The report also mentioned that “Despite the fact that retail customers are trading less, we are maintaining clientele and increasing assets by encouraging the use of non-investing products.”