Investors should bundle up because crypto winter, a popular term for the industry’s periodic downturns, is expected to last another 12 to 18 months, says Coinbase CEO Brian Armstrong.
In an interview with CNBC, Armstrong cautioned investors because the crypto market is entering rescission as Bitcoin and Ethereum prices experience extreme volatility, the global market cap declines from $3 trillion to $1 trillion. He urged for safety because the consensus had already been attained.
While Armstrong hopes the bear market wraps up in that time, the largest U.S. crypto exchange is currently preparing for an even more extensive downturn. He also noted that the company has survived four crypto downturns in 10 years and is prepared to adapt to the current bearish situation until warmer days arrive.
Coinbase Future Prospects
The CEO claims to build great future products to do fine over the next five or ten years. As most of the company’s revenue is tied to trading volumes on its crypto exchange, Coinbase is increasingly moving its business towards “subscription and services,” which could help bring more consistency to its financials.
It includes interest income, Coinbase’s premium membership, blockchain rewards, and fees for storing crypto on the platform on behalf of customers. He said that subscriptions and services now make up 18% of the revenue.
He added that the company wants to convert as many fixed costs into variable costs as possible. For instance, the Coinbase Super Bowl ads are a thing of the past, though Armstrong claims for more Coinbase ads out there.
Although the business’s revenue increased by more than 300% in the final quarter of 2018, Coinbase failed analyst forecasts in both the second and first quarters of 2022, with year-over-year net revenue falling by about 60% and 27%, respectively.
In light of the recent setbacks due to crypto winter, Armstrong is cutting back on costs in marketing, external vendors, and Amazon Web Services. In addition, the company also laid off about 1,100 people, or 18% of its workforce, in June.
This news has not been all bad for Coinbase. Earlier this month, despite falling prices, the company announced a partnership with BlackRock, the world’s largest asset manager, to offer its institutional clients access to crypto trading through its platform. The announcement saw Coinbase’s share price soaring 18% to $95.47 before retreating in recent weeks. Coinbase stock closed yesterday at $71.18, down 0.41%.
Crypto Market Stats
Last week’s extreme volatility pushed bitcoin south by over $4,000 to a three-week low of $20,800 (on Bitstamp). However, it quickly reclaimed the $21,000 level. Since then, the asset has remained relatively stable, with a few minor price pumps and dumps. Currently, it stands at just over $21,000, and its market cap is still above $400 billion.
Similarly, most altcoins have also failed to produce large price swings in the last 24 hours. Ethereum was quite volatile for some days. But, the hype surrounding the upcoming Merge had pushed ETH to a multi-month high of over $2,050 about ten days ago. ETH lost over $500 the following week but now stands above $1,600 after a minor daily increase.
Ripple, Polkadot, Shiba Inu, and Avalanche are also slightly in the green now. However, Cardano, Solana, Dogecoin, and Polygon have charted massive losses in the last 7 days. The global crypto market cap has managed to defend the $1 trillion level.
Disclaimer: The author’s comments and recommendations are solely for educational and informative purposes. They do not represent any financial or investment advice. Always DYOR (do your own research)