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Bitcoin price has gained nearly 50 percent YTD, significantly contributing to Coinbase shares rallying over 72 percent since the calendar flipped.
Coinbase Global Inc (NASDAQ: COIN) announced its Q4 earnings and full-year 2022 results on February 21 which has affected its stock price. The American cryptocurrency exchange reported fourth-quarter revenue of $605 million, up 5 percent from the previous quarter and beating the consensus estimate of $588 million. During the fourth quarter, Coinbase reported a loss per share of $2.46, against a forecast of about $2.52.
Coinbase Stock and Its Reaction to Q4 2022 Earnings
Following the announcement, Coinbase shares recorded heightened volatility on Wednesday. According to market data provided by MarketWatch, Coinbase shares tumbled nearly 6 percent during the day but closed the market trading at $61.18, down 1.43 percent from yesterday’s opening price. However, COIN shares gained approximately 1.29 percent during the after-hours market session.
With huge exposure to Bitcoin on its balance sheet, Coinbase shares are highly correlated with the former’s volatility. On Wednesday, Bitcoin price tumbled nearly 4 percent to around $23.7k. As a result, Coinbase shares were bound to decline in a similar version, with almost a 6 percent decline.
Notably, Bitcoin price has gained nearly 50 percent YTD, significantly contributing to Coinbase shares rallying over 72 percent since the calendar flipped.
“In total, the crypto market cap declined 64% or approximately $1.5 trillion over the course of 2022. As a result, our 2022 total trading volumes and transaction revenues declined 50% and 66% Y/Y, respectively. When zooming out and looking at the most recent price cycle, which started in 2020 – and after the industry endured the collapse of $LUNA and FTX – we have seen growth and advancement of both the industry and Coinbase,” the company noted.
Coinbase and the Market Outlook
As the cryptocurrency market recovers from the 2022 bear market, regulators are taking this period to crack down on bad actors. The United States financial authority regulators, including the CFTC and the SEC, have embarked on a journey to dismantle predatory crypto businesses. For instance, the United States SEC has charged the Kraken cryptocurrency exchange with selling unregistered securities through its staking program.
As a result, Coinbase Global could get charged with any financial misconduct, including money laundering, despite being a licensed Trust Bank. Notably, Coinbase has reported declining crypto trading volume fueled by the crypto winter and increased government scrutiny.
Nonetheless, the company’s trading volume grew to $830 billion in 2022 from $193 billion in 2020.
Subscription and services revenues grew over 17x to nearly $800 million in 2022 from less than
$50 million in 2020. Roughly 25 percent of the top 100 most significant hedge funds in the world by reported AUM chose to onboard with Coinbase. For instance, Coinbase announced industry-leading partnerships, including with Blackrock Inc (NYSE: BLK).