Bitcoin Holds Support at $23K as Coinbase Earnings Reveal Billion-Dollar Losses

After rising to $24k this week and testing support at $23k yesterday, Bitcoin continues to trade sideways today, managing to hold current support levels. The 24-hour trading volume shows a slight decline, down 9% today as the markets slow down.

Key Points:

• Bitcoin continues to hold support at $23k and trades sideways.
• Coinbase’s Q2 Earnings Report reveals $1.1 billion in losses.
• Coinbase remains focused on improving its products and is optimistic about the long-term outlook for cryptocurrency markets.

Coinbase Earnings Report Reveals Substantial Losses

As earning season is upon us, and as traders predicted, Coinbase’s Q2 report revealed a billion-dollar loss due to the prolonged crypto winter in the last quarter.

According to its Q2 Shareholder Letter, Coinbase revealed a $1.1 billion loss last quarter. Comparing that to a $1.59 billion income in the same quarter the previous year, the crypto bear market has significantly impacted last quarter’s earnings.

The letter elaborates that crypto markets are highly cyclical, which isn’t the first time the company has dealt with such a downturn.

“The current downturn came fast and furious, and we are seeing customer behavior mirror that of past down markets. During these down markets, we remain focused on building great products, while we typically see more casual competitors step back. Each crypto cycle has landed higher than the previous one, due to innovations built during the
downturns.”

Traders expected disappointing results for Q2’s earnings as the decline in cryptocurrency prices and interest wasn’t surprising. In response to the market’s sentiment, Coinbase was forced to reduce its expenses and optimize its spending on labor and infrastructure.

The company reduced its headcount in June by 18%, letting go of more than 1,100 employees. In addition, Coinbase will continue to invest in teams in lower-cost regions and scale back paid media and incentives, investing in efforts to drive organic traffic to the platform.

The good news is that Coinbase remains excited about the long-term value of cryptocurrency and its investments. Focusing on improving its products, enhancing customer support, and expanding its ecosystem is a top priority for the company.

The letter’s closing statement focuses on the company’s commitment to operating more efficiently as they build for the future. They are optimistic that the crypto market capitalization doesn’t deteriorate substantially below July 2022 levels and that “we do not see changes in our current customer behaviors.”

Final Thoughts

It only makes sense that Coinbase has had to downscale significantly due to the prolonged bear market. There’s a saying in business: “Hire slow, fire fast.” While firing many employees might not provide the best PR for a company, it’s a better alternative than exhausting all your funds on labor while not making any revenue.

Companies that fail to downscale in time may go out of business entirely if funds dry out too quickly. While Coinbase received some heat a few months ago for firing employees and rescinding many job offers, that was the necessary strategy to stay afloat during this bear market.

With the substantial decline in crypto interest and users, focusing on organic traffic and improving its suite of products is the right move for Coinbase to prepare itself for the next bull run. After all, companies who manage to remain in business after an eight-month bear market will reap the fruits of their labor during a bull quarter, which will inevitably come as markets are cyclical.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

Follow us on Twitter @themerklehash to stay updated with the latest Crypto, NFT, AI, Cybersecurity, and Metaverse news!

Image Source: dimasik85/123RF // Image Effects by Colorcinch