Coinbase posts larger loss than expected on cryptocurrency rout

On Tuesday, Coinbase Global Inc reported a larger than expected loss as investors worried about this year's rout in risky assets shied away from trading in cryptocurrencies, sending its shares down 6 per cent.

Retail participation fell 68 per cent and institutional trading fell 46 per cent at the coin exchange's second quarter, as trading volumes at the exchange increased by more than halved to $217 billion in the second quarter.

The investors have dumped speculative assets from stocks this year because of fears that central bank policy tightening could cause the U.S. economy to go into a recession.

In 2022, the price of criptocurrency fell by 50 per cent and forced several companies including Coinbase to cut jobs due to the fact that it earns a large portion of its revenue from trading fees.

The volume of trading in the third quarter will be even lower than that of the reported period, according to the exchange.

Michael Miller, equity analyst at Morningstar Research said that coinsbase will probably need to cut costs if they want to avoid missing their target and maintain credibility on their ability to limit cash burn.

The company says it wants to contain core loss by close to $500 million for the year.

The earnings for the April-June quarter were $4.76 a share, compared to the $2.65 expected by analysts, according to Refinitiv IBES data.