Coinbase NFT and the Crypto Winter

What is Coinbase?

Coinbase (COIN) is a major crypto asset financial exchange platform. It was founded in July 2011 by Brian Armstrong, a former Airbnb engineer who was greatly inspired by cryptocurrency after working with a differing system of multiple countries and currencies. The platform aimed to provide services to buy, sell and store Bitcoin (BTC), and has grown greatly to harbor many other cryptocurrencies for trading. It has also grown to become one of the best cryptocurrency exchanges used.

Coinbase reached a USD $85.7B valuation at a price of $328.28 per share, a 52% increase in reference price set by Nasdaq on the first day of trading in April 2021. However this has fallen to a market capitalisation of $16.2B and $73.0 per share at the time of writing.

Coinbase Plunges

Coinbase posted a revenue of $1.17 billion which missed the Refintiv estimate of $1.48 billion in the first quarter. Cryptocurrency trading volumes on the platform were also down at $309 billion in the first quarter, lower than estimated $331.2 billion and down from $547b in the fourth quarter.

The downfall in revenue is attributable to the volatility in cryptocurrency, with Bitcoin falling by almost 47% year to date. This could be linked to the depeg in UST (TerraUSD), which is a stablecoin pegged to the US Dollar. The $1 peg sunk to below $0.70 in May 2022.

Such factors create uncertainty amongst investors.

Keeping Warm during the Crypto Winter

Despite the challenges faced by such volatility in the market, Coinbase continues to expand its platform, keeping up with the evolving world of cryptocurrency.

In October 2021, Coinbase announced its launch of an NFT platform, Coinbase NFT, which eases the process of trading NFTs. Its NFT launch on their app, with around 3M people on the waitlist for its beta-launch trial.

Coinbase faces large competitors such as OpenSea and LooksRare, other NFT trading platforms with high volumes of NFT already being traded. Coinbase NFT would remove the need to have a secondary wallet such as Metamask to trade NFTs and instead use a Coinbase based wallet which would also waive some trading fees. A social platform with threads would also be integrated to spark engagement.

However, its launch in April 2022 has faced a sluggish start with less than 900 transactions in its first week.

Coinbase faces harsh competition with competitors, and the high volatility in cryptocurrency markets faced in the past few months will also be a challenge.

Despite such risks, Brian Armstrong pursues an expansive approach to Coinbase, aiming to enlarge his team and the possibilities of the Coinbase application.