Coinbase Drops on Trading Volumes

In the second quarter of 2022, Coinbase Global Inc (NASDAQ: COIN) suffered a record $1.1 billion loss. This was on the back of far lower than forecast trading volumes, lower revenues and a fall in transacting users. This saw the largest US cryptocurrency exchange stock fall by 5% in after-hours trading. However, the previously announced cooperation with BlackRock is still a bright spot on the horizon.

Coinbase Trading Volume Plunges And Misses On Revenue, Posts Bigger Loss

Coinbase Global Inc, the largest US cryptocurrency exchange, posted a $1.1 billion loss on Tuesday, which amounted to a loss of $4.98 per share, against analysts’ forecast of a loss of $2.65 per share (according to Refinitiv). They also missed notably on revenue too, with $808.3 million, versus expectations of $832.2 million (again, data from Refinitiv). The revenue decline was significant, almost 64%, as was doubtless driven by the investor exodus from the cryptocurrency market with the dramatic fall crypto coin in prices during the 2022 Crypto Winter. Transactions by retail clients were down 66% and worse than consensus estimates from analysts and transacting users fell to 9 million in the second quarter, declining 2% from previous quarter.

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COIN Stock Drops Over 5% After Hours, Buy Opportunity?

The disappointing results from Coinbase came after the closing bell and saw COIN shares fall by over 5%, although the stock was already down close to 11% in the regular session, losing over 16% since Monday’s close.

However, this comes in the wake of a strong, impulsive rally in early November, primarily driven by the previously announced cooperation with BlackRock (see below). The strong technical basing pattern that has been built through the May-July consolidation phase and reinforced by the early August surge sets the intermediate-term outlook to a positive for Coinbase. From a technical analysis perspective, the current setback could be viewed as a buy opportunity with upside risks into the balance of Q2, possibly for August to the very recent impulse peak at 116.30 and the early May swing high at 132.75. Into year-end, the bigger picture threat is for a move towards chart resistances from March and February, clustered at 206.77/217.42.

Blackrock Alliance Bodes Well For The Future

In our previous post, Coinbase Stock Climbs On Blackrock Partnership, we highlighted the announcement from Coinbase and BlackRock (BLK ) for an alliance. This will see the world’s largest cryptocurrency exchange, Coinbase, partner with the world’s largest asset manager, BlackRock Inc, to allow BlackRock’s institutional investors to manage and trade Bitcoin.