Cryptocurrency trading platform Coinbase reported a $545 million net loss in the third quarter, from the $406m net income in the same period last year.
The company’s revenue dropped 53.3 per cent to $576m, almost $659 less than the third quarter of 2021, Coinbase revealed in a statement on Thursday.
It said the transaction revenue was “significantly” affected by stronger macroeconomic crypto market challenges and trading volume moving offshore.
“Headwinds continued to impact our transaction revenue," the company said in a letter to shareholders.
"While we face three headwinds on our trading volume and associated transaction revenue, we are retaining customers and growing assets through engagement with non-investing products.
“Macro conditions deteriorated in Q3, resulting in the daily average crypto market cap and volatility declining 30 per cent and 24 per cent sequentially, respectively.
"The trading volume has been shifting away from the US, where our business is concentrated."
The company said it believed the volume shift away from the US is partially because of the perception of uncertainty that some digital asset issuers might have about the development of a regulatory framework related to the industry, whether by Congress or regulators.
Coinbase served 8.5 million MTUs (monthly transacting users) in the third quarter, a 6 per cent decline compared to the second quarter.
Digital currencies have rapidly become popular over the past few years, especially in Asian and Middle East markets.
Bitcoin, the world’s largest digital currency, plunged from a record high of about $68,000 last year to trade at about $20,201.10 on Thursday, while the sector’s market capitalisation has fallen below $1 trillion.
The sector's rollercoaster ride is far from over, dragged down by this year’s equity bear market, global economic uncertainty, higher interest rates and a sharp rise in the cost of living around the world, analysts say.
In June, Coinbase also announced it would lay off about 18 per cent of its workforce amid a steep decline in the prices of digital tokens and a wider stock market sell-off.
In the July-September period, the daily average crypto market capitalisation declined 30 per cent on a quarterly basis, including 35 per cent and 32 per cent declines in the average price of Bitcoin and Ether, the biggest cryptocurrencies.
Crypto asset volatility, a key driver of the industry's retail trading volume, reached its lowest point in the third quarter since 2020, Coinbase said.
At the end of third quarter, assets on the Coinbase platform stood at $101bn, up 5 per cent from $96bn at the end of the second quarter.
The increase was primarily driven by net inflows from customers and an increase in end-of-quarter crypto prices.
