Cryptocurrency exchange Coinbase is feeling the continued decline of Bitcoin hard. The brokerage released its first-quarter earnings Tuesday, reporting a loss and a 27% decline in revenue.
The company's share price plummeted by more than 25% following the release of the news, hitting a new record low. The stock has been on a steady decline, mimicking the decline of Bitcoin and other cryptocurrencies. Since the start of the year, Coinbase's stock price is now down more than 75%. It is now trading nearly 85% below its all-time high in November.
The recent nosedive of cryptocurrencies had wiped out more than half of Coinbase's market value just in the past week. Coinbase stated that Bitcoin and Ethereum accounted for nearly half of its transaction income in its quarterly financial report.
Following the release of the Consumer Price Index data on inflation, bitcoin prices plummeted below $30,000 on Wednesday. Coinbase reported dramatic declines in the number of users, trading volume, and assets in the fourth quarter as a result of the volatility.
In a letter to shareholders, Coinbase attributed its poor numbers to the continued volatility of cryptocurrencies and the decline of cryptocurrency prices. Despite this, the company said it remains "excited" about the future of digital currencies.
The language used by the company in its earnings filing with the Securities and Exchanges Commission had alarmed some investors, particularly when it talked about the possibility of bankruptcy. The company said that if it goes bankrupt, the cryptocurrency assets it is holding for customers may be subject to bankruptcy proceedings. It added that some customers could be treated as general unsecured creditors in such an event.
Coinbase CEO Brian Armstrong attempted to reassure consumers and dispel any doubts regarding the company's insolvency. He assured customers that their assets remain secure at Coinbase. Armstrong stated in one of a series of tweets late Tuesday night that the company is in no risk of going bankrupt.
Armstrong said the company was only compelled to incorporate the bankruptcy warning as a result of SEC laws requiring a newly needed statement for public corporations that hold crypto-assets for third parties.
Coinbase is, without a doubt, the most well-known bitcoin exchange in the world. Coinbase has been actively integrating other cryptocurrencies, such as Cardano, into its platform. It has also developed a marketplace for non-fungible tokens (NFTs), which are digital assets that have grown in popularity in the art and collectibles field. However, none of this has been enough to stop Coinbase's stock price from plummeting in recent months.