Coinbase, the largest US-based cryptocurrency exchange, posted a loss for the first quarter amid a sharp slowdown in crypto trading volumes, as it seeks to diversify into other areas to be able to better weather downturns in the crypto industry.
Crypto prices dipped considerably early this year, with Bitcoin down around 22 percent over the past six months after reaching an all-time high in October.
This has dimmed interest in one of Coinbase’s biggest revenue generators, crypto spot trading, with the result that transaction revenue was lower than analysts had expected – $755.8 million (£558m) for the quarter, compared to the $805.2m projected by analysts.
Diversification
Overall revenue reached $1.41bn, compared to an expected $1.52, according to LSEG figures.
Subscriptions reached $583.5m, also lower than analysts’ expectations.
The company reported a net loss of $394.1m for the quarter, compared to a profit of $65.6m a year earlier, while total revenue dropped to $1.43bn from $2.03bn year-on-year.
Coinbase is trying to diversify into areas such as stablecoins and staking, through its subscription and services business, which it believes will be less cyclical than transaction revenue.
It reported growth in this area, including about $4.2bn in derivatives trading volume in the first quarter, up 169 percent year-on-year.
Crypto volatility
It said its revenue from its prediction market business is expected to reach $100m in annualised revenue by the end of this year.
In February, the price of Bitcoin plunged below its level prior to the US elections of November 2024, a key event that had spurred exuberance in the market on the expectation of more relaxed rules around cryptocurrencies.
Crypto prices have remained relatively low since then, as investors have avoided high-risk assets.
