A beleaguered cryptocurrency exchange is facing further turmoil in the wake of a drop in coin valuations.
Queen Piece (Currency) Shares are down 75% on weak earnings and low volume this year.
The company’s stock is very volatile as its attempts to regain a foothold in the crypto industry remain murky.
Stocks closed negative in 13 out of the last 15 days as of September 6. The stock rebounded slightly by 8.7% amid a broad market rebound on September 7.
New Coinbase Problem
Now, Coinbase is facing a new challenge as many investors have lost interest in owning or trading cryptocurrencies such as Bitcoin or Ethereum. The trend was seen in Coinbase’s earnings and trading volume dropping during the second quarter.
Transactions slumped as cryptocurrency valuations have now fallen below $1 trillion for the broader virtual currency market while bitcoin traded below $19,000 before some recovered on Wednesday.
Coinbase reported that revenue during the second quarter fell 31% from a year ago to $803 million while retail volumes fell 38% to just $74 million. The group also posted a larger-than-expected loss of $4.98 per share, compared to a profit of $3.45 per share during the same period in 2021.
Coinbase said trading volumes fell 53% from a year ago to $217 billion, and blamed it on “behavior that reflects the behavior of past markets.”
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A quarter of the company’s trading volume is derived from Bitcoin, the virtual currency that reached an all-time high of $67,802.30 in November 2021.
Coinbase deals with competition challenges
Coinbase is facing more challenges as its main crypto platform competitor, BinanceUS, will eliminate trading fees for daily bitcoin transactions.
BinanceUS, an arm of the world’s largest cryptocurrency exchange, allows investors to trade bitcoin, the largest cryptocurrency by valuation, against assets such as the US dollar, ether and other dollar-backed stablecoins for free, eliminating its previous 0.1% fee on most transactions.
Coinbase recently launched a new partnership with BlackRock, the world’s largest asset manager, allowing its institutional clients to access Coinbase Prime.
Coinbase shares suffered due to a liquidity crunch that affected many large and prominent lenders such as Voyager Digital, Celsius Network, Babel Finance and BlockFi.
Retail investors are now worried about investing in cryptocurrencies and some have closed their positions and are sitting on the sidelines. While some cryptocurrency investors may return, others seem to have lost interest altogether.
Some cryptocurrency investors have lost their investment and are not planning to return, said Mike Burrow, Head of Portfolio Management at Fortis Digitalpreviously told TheStreet.
He said the demand for cryptocurrencies has largely faded while the supply has risen.
Coinbase began its efforts to cut costs in June and is laying off 1,100 employees, or 18% of its workforce.