Coinbase continues to face headwinds in 2022. The largest crypto exchange in the US reported an operating loss of $1.04 billion in the second quarter of 2022, which is in sharp contrast to the $874.7 million profit it registered during the corresponding period in 2021. Following the announcement on 9th August, the price of Coinbase stock fell 4%, ending the day 10% lower than the opening price.
Bad Times for Coinbase
For Coinbase, the year 2022 has been a disaster. About 18% of the exchange’s personnel were let go by mid-June, which amounted to about 1,100 job losses. Subsequently, Bitcoin started to fall dramatically to around $20,000 at about this time. Following this development, Goldman Sachs reduced Coinbase’s COIN rating to “sell” as its shares fell by around 70% since its debut on Nasdaq in April 2021. Coinbase also stated in April 2022 that it would hire 1,000 people in India to aid its growth plans. Due to regulatory issues, Coinbase was obliged to stop accepting payments over the Unified Payments Interface (UPI).
Turmoil in Crypto Market
In Q2 2022, as spiraling inflation tightened its hold on the American economy, the price of bitcoin, Ethereum, and other popular tokens began to decline. Investors started taking their money out of riskier investments such as cryptocurrency as the price of necessities such as gas and groceries increased. The price of cryptocurrency continued to decline as investors sold their digital assets. The price of bitcoin, which reached $68,000 at its peak in November 2021, dropped 56% since the beginning of 2022 and is trading at $20,250 as of Wednesday. Ethereum decreased by around 70% to $1,140, while Ripple dropped by 61% to about 30 cents.
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