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Cryptocurrency exchange Coinbase (COIN) predicts a decline in trading volume and active users for the third quarter, following lower crypto prices and trade action, even as second quarter results beat expectations.
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Coinbase’s stock plunged after hours. The company, the largest cryptocurrency exchange in the United States, said digital asset prices and volatility had “declined significantly from second quarter levels.”
“As a result, we believe retail MTUs and total trading volume will be lower in the third quarter compared to the second quarter,” Coinbase said, referring to monthly trading users.
The company announced the results as cryptocurrency prices traverse steep peaks and valleys, with investors weighing the prospect of new regulations and industry crackdowns against signs of general support. The just adopted Senate infrastructure agreement includes new IRS reporting requirements for cryptocurrency transactions.
Coinbase income
Coinbase earned $ 6.42 per share, well above FactSet’s estimate of $ 2.32 per share. Revenue was $ 2.03 billion. It was above the forecast of $ 1.821 billion.
The number of monthly retail transaction users rose to 8.8 million in the quarter, up 44% from the previous quarter. The exchange had 68 million total verified users on its platform at the end of the second quarter.
The volume of transactions increased by 40% compared to the previous quarter. The total amount of assets on the platform, however, has declined over this period.
Coinbase, in its letter to shareholders, noted the roller coaster swings in the cryptocurrency market during the quarter. The price of Bitcoin topped $ 64,000 in April, before falling sharply.
“As the volatility and prices of crypto assets are highly correlated with trading income, the crypto market environment strongly influenced our second quarter financial results,” the company said.
The company said that in July, monthly retail transaction users were 6.3 million. The volume of transactions amounted to $ 57 billion. So far this month, those levels have improved, but were still lower than at the start of the year.
Stock of coins
Coinbase stock fell 1.6% after hours on the market today. Shares have fallen widely since their debut in April, when the price of Bitcoin was near record highs. COIN stock has jumped 22% in the previous three sessions, rebounding from its 50-day line.
Coinbase stock has a composite rating of 66. Its EPS index is 71.
Coinbase, like other Bitcoin stocks, tends to rise and fall with the underlying cryptocurrency.
Bitcoin’s price was little changed from 24 hours earlier at $ 45,700. Bitcoin topped $ 46,400 on Monday, the highest since mid-May. This comes after the price of Bitcoin fell below $ 30,000 at the end of July.
Among other Bitcoin stocks, Marathon Digital Holdings (MARA) fell 1% after a few hours. MicroStrategy (MSTR) increased by 0.2% after a few hours.
the Grayscale Bitcoin Trust (GBTC) was down 2% in the regular session.
Coinbase’s fortunes are largely tied to the public’s interest in cryptocurrencies, earning income from transaction fees generated by cryptocurrency transactions on its platform.
The company, which competes with other exchanges, said in June that it would allow certain exchanges of the Dogecoin cryptocurrency based on the memes. Coinbase’s first quarter results, released in May, were lower than estimates.
TVN, Infrastructures
In a list of questions posed by shareholders to the company ahead of its results, the most shared question was whether Coinbase was considering “adding NFTs?” or non-fungible tokens. These tokens use cryptographic technology to make objects like art as verifiable goods that can be sold as digital goods.
Another widely shared question asked for more information on how Coinbase’s Prime service, aimed at institutional and more sophisticated investors, was different from other service providers.
Bitcoin stocks also face broader challenges. Cryptocurrency industry groups have expressed dismay at the Senate’s decision not to rework an element of the $ 1,000 billion bipartisan infrastructure bill that sought to strengthen reporting requirements transaction data and industry tax application. The stricter rules would bring in around $ 28 billion over the next decade to fund the bill.
The Senate passed the bill on Tuesday. The bill – and the attention of crypto lobbyists – is now going to the House.
“Harmful” requirements
The problem was how the bill defines the “brokers” of cryptocurrency transactions who would be subject to the reporting requirements. The crypto industry was concerned that the bill’s definition was too broad and would apply to people like miners and others who do not directly handle crypto transactions and are unable to collect user information. .
“As drafted, the Infrastructure Bill contains harmful IRS reporting requirements that many members of the crypto ecosystem do not have the capacity to comply with,” Kristin Smith, Director, said Monday. executive of the Blockchain Association, an industry advocacy group. “As a result, many crypto players will be forced to relocate overseas, leaving future jobs and economic growth on the table.”
Elsewhere, the price of Bitcoin and Bitcoin shares has come under pressure amid a crackdown in China on cryptocurrency-related activity.
However, in a recent panel, You’re here (TSLA) CEO Elon Musk said that “overall I support Bitcoin”. Ark Invest CEO Cathie Wood also provided support for the digital asset.
Follow Bill Peters on Twitter at @IBD_BPeters.
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