The Coinbase CFO’s outlook on the future of cryptocurrency. Cryptocurrencies such as bitcoin are reaching all-time highs in value. But Wall Street is punishing cryptocurrency leader Coinbase. After the company reported earnings on Tuesday. And reported a dismal quarter for crypto trading.
According to Coinbase, the number of monthly transacting customers decreased from the previous quarter. Falling to 7.4 million from 8.8 million in the second quarter. While it was up from 6.1 million a year earlier. Trading volume declined to $327 billion in the third quarter. Down from $462 billion in the previous quarter. And the market fell short of expectations in terms of quarterly revenue.
Losses have eased following a dramatic drop of as much as 13 percent in after-hours trading on Tuesday. And some on Wall Street remain optimistic about the company’s prospects. With price targets as high as $500 — its shares were trading below $350 on Wednesday.
In an interview with CNBC on Wednesday, BTIG stock analyst Mark Palmer stated that the sequential fall. In revenue “should not have come as a big surprise.” Following the summer lull in cryptocurrency trading. He expects this quarter to be the company’s most profitable quarter ever.
While acknowledging that its business is volatile, the corporation attempted to argue. That it should not be viewed as “a quarter-to-quarter investment” in a shareholder letter.
When the CNBC CFO Council asked members about bitcoin as a financial instrument. Earlier this year, the results revealed a greater acceptance of the cryptocurrency. With more than half stating that it is “for real.” However, chief financial officers expressed concerns about putting a reasonable value on the cryptocurrency.
Crypto trading fees are not the business model
However, despite the fact that crypto trading volumes were down in the third quarter. A trend that also weighed on brokerage company Robinhood, Haas highlighted. That the company does not consider itself to be a trading business.
He told investors, “We don’t view of ourselves as primarily competing on fees at this point in time.”
This is due to the fact that trading is by its very nature a commoditized enterprise.
Coinbase’s chief financial officer stated that the company is competing “on access to assets.” On the retail side of the cryptocurrency industry.
Rather than the Coinbase CFO’s is focusing on a single quarter’s trading volume or income, the company will focus on the use. Of future staking, transacting using products such as its Visa debit Coinbase Card. And interacting with DeFi, or decentralized finance.
“Fees are not the fundamental factor on which we compete,” Haas stated emphatically.
In addition, she stated that fees will be reduced in the future.
There is more activity among institutions and its Coinbase Pro users than among retail users. During periods of low volatility, which occurred during the summer. The inverse is true during periods of high volatility, which occurred again in September and October. When there is more activity among retail users.
“We do believe, though, that in the long run, zooming out a little, that fee compression will occur. As more and more items get commoditized in the cryptocurrency space,” Haas said. “As a result, we’ve already began concentrating on diversifying our sources of revenue.”
It is the Coinbase CFO’s belief that once cryptocurrency reaches what the company’s CFO refers to as. “The utility phase,” consumers will not be coming to its platform solely to transact. That is, purchase and sell cryptocurrency.