Coinbase’s third-quarter earnings call was not surprising.
Quartal on quarter, transaction revenues fell 44% (QoQ), but overall net revenues dropped approximately 28%.
Both monthly transacting users, as well as trading volumes, were down QoQ.
The institutional cryptocurrency exchange was able to reduce quarterly losses by 50% despite having a smaller workforce and 38% lower operating expenses.
Net loss was US$545mln, and adjusted EBITDA was US$116mln.
The US$5bn cash position is one of the few bright spots for the struggling exchange.
Although it has fallen to US$6.3bn annually, it still indicates a viable cash runway in the near future.
Given the pragmatic outlook of the company, it will be a great asset.
“Due to expense actions, we remain cautiously optimist for our ability to operate within the US$500mln Adjusted EBITDA loss limit that we communicated for 2022,” the company stated to shareholders. It also said that “This assumes crypto market capitalisation, volatility, and customer behaviours do not significantly deteriorate below October levels.”
This is a very dangerous assumption. However, crypto markets have been experiencing some tailwinds recently.
There is a sense that bitcoin and ether have reached the bottom, with key support levels for bitcoin and ether maintaining, and historically low volatility.
Coinbase’s client mix is another ray of light.
Although retail trades still make up the majority of Coinbase revenues, institutional investors account for 80% of all trading volumes.
Coinbase is able to capitalize on this strategic advantage by displaying a large outflow in short Bitcoin positions.
Coinbase is likely to make it through this winter, no matter how battered or bruised.
Although a pivot to a dovish Federal Reserve would be a good idea, it is likely still some time off.
