Investors should brace themselves as cryptocurrency winter, a popular term for periodic downturns in the industry, could last another 12 to 18 months. This is what Coinbase CEO Brian Armstrong said.
Armstrong hinted that while he hopes the bull market will be over by then, America’s largest cryptocurrency exchange is preparing for an even bigger drop.
“We all hope it will be, you know, 12 to 18 months, after which we expect a good recovery, but obviously you have to plan for it to be longer than that. We’re not trying to be too optimistic about predicting the future,” Armstrong said.
However, Coinbase’s CEO said the company has weathered four cryptocurrency crashes in the past 10 years and is ready to adapt to the “cold” until “warmer days” arrive.
“If we don’t get distracted and keep making great products, we’ll be fine for the next five or 10 years,” Armstrong said.
Most of the company’s revenue is tied to trading volume on its cryptocurrency exchange, but Armstrong said Coinbase is increasingly moving its business toward what he called “subscription and services,” which could help bring more stability to the company’s finances. Subscriptions and services now account for 18 percent of the company’s revenue, he said.
“I would like to get to the point where more than 50 percent of our revenue is subscriptions and services,” he said.
While the company’s revenue in the fourth quarter of last year rose more than 300 percent year-over-year and beat expectations by more than half a billion dollars, Coinbase missed analysts’ expectations in the second and first quarters of 2022, with net income down about 60 percent, or 27 percent on an annualized basis.
In light of the recent setbacks caused by the crypto winter, Armstrong said the company is cutting costs in marketing, outside vendors and Amazon Web Services. The company also laid off about 1,100 people, or 18 percent of its workforce.
While Armstrong didn’t rule out layoffs in the future, he said it was a one-off for now.
The news wasn’t all that bad for Coinbase. Despite falling prices, the company earlier this month announced a partnership with BlackRock, the world’s largest asset manager, to offer its institutional clients access to cryptocurrency trading through its platform. After that, Coinbase shares rose 18 percent to $95.47, before paring its gains in recent weeks.
The company’s shares closed at $71.18 on Tuesday, down 0.41 percent.