•Coinbase CEO Brian Armstrong predicts that the company will bring in only half as much revenue this year compared to last year, due to the bear market.
• Last year, Coinbase made $7 billion dollars in revenue with $4 billion of positive EBITDA.
• This coming financial year, they are predicting less than half of that amount.
• The market has already braced itself for a less impressive year from Coinbase, with the company’s share price down 83.5% since the start of the year. At its third-quarter results, released last month, Coinbase pointed to a drop in trading volumes as its net revenue for the period declined 28% to $576 million.
• Armstrong also told Bloomberg that there was a clear need for regulation in the crypto world and that he expects something to be put in place in the U.S. within the next year; saying FTX’s downfall is representative of bad actors present “in traditional finance” like Bernie Madoff or Enron .
Coinbase is one of the largest exchanges for cryptocurrencies in the world. It recently released its financial results for 2022 and it has been a roller coaster year for them. The crypto markets, however, have had a much more volatile ride with the bear market causing considerable drops in share prices. Let’s take a look at how Coinbase fared during 2022 and what this could mean for the crypto markets as a whole.
Coinbase’s Revenues & Profits Last Year
Coinbase CEO Brian Armstrong’s prediction that the company will see only half of its 2021 revenue this year may be a disappointment to investors, but it certainly isn’t surprising. The 2022 bear market has seen an immense slump in investment across numerous industries and Coinbase was no exception. Nevertheless, Coinbase remains one of the most reliable sources for managing digital currencies all over the world, and their consistent performance over several years likely makes up for the potential drop in their yearly revenue. Undeniably, Armstrong’s prediction speaks volumes about the current state of cryptocurrency investment opportunities more than anything else, as many providers no longer offer as much profit potential as they once did.
Coinbase reported a total revenue of $7 billion during 2021, with an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $4 billion. This was significantly higher than their expected revenues of $3.5 billion that they had projected at the start of the year. Their profits have since taken a hit since then due to the bear market, but their overall performance last year was still quite impressive.
The Impact on Share Prices
The bear market has had an enormous impact on Coinbase’s share prices as they have dropped by 83% since January 2021. In addition to this, their third-quarter results showed a 28% drop in net revenue to $576 million from $1 billion in the second quarter of 2021. This indicates that there is an urgent need for regulation within the cryptocurrency markets as prices continue to fluctuate wildly due to speculation and uncertainty about its future prospects.
A Need For Regulation In Crypto World
Brian Armstrong, founder and CEO of Coinbase recently voiced his opinion on the need for regulation in US markets within the next year or two in order to bring stability back into crypto markets and ensure that bad actors are not able to take advantage of investors’ lack of knowledge or understanding about cryptocurrencies and their potential risks involved in trading them. In an ironic pot-calling-the-kettle black action Armstrong’s sentiment was ceremoniously echoed by now shamed ex CEO Sam Bankman-Fried from FTX who warned against bad actors, of which he appears to have been, such as Bernie Madoff and Enron who were able to manipulate traditional finance markets through poor practices when there were no regulations present to protect investors from these fraudulent activities. Armstrong has gone on to call FTX a “bad actor” in the crypto space which has left a “black mark” on the industry
Some things need to change
Coinbase’s performance during 2021 was impressive despite being affected by the bear market towards the end of the year which had caused significant decreases in share prices as well as net revenue for their 3rd quarter results compared with previous quarters this financial year. With increasing speculation about cryptocurrency’s future prospects and its current lack of regulation allowing bad actors such as Sam Bankman Fried and Terraform labs to manipulate markets, Brian Armstrong believes that it is time for US governments to step up regulations within the crypto world over the next year or two so that investors can be protected from any potential losses or fraudulence taking place in this space moving forward.