Hey dad, what was it like when Bitcoin was trading at $100k+? 

(Source: Giphy) 

The last time things were looking this bleak for crypto, Coinbase was going full-send with its “America Loves Crypto” concert LOL. Oh how the turntables, they say. Case in point: Coinbase just posted a $667 million net loss and watched revenue crater 20% to $1.8 billion, which is a hell of a way to remind everyone that crypto's "this time is different" belief always ends with the same finale.

Bitcoin's down nearly 50% from October's high, retail's gone full witness protection, and exchanges are getting reacquainted with the part of the cycle where everyone remembers they're simply just glorified casinos. As for Coinbase, they’ve tried to play the game smart.  They bought Deribit for derivatives exposure, launched stock trading (lol), rolled out prediction markets, and leaned hard into stablecoin revenue-sharing with Circle. Meaning, the goal was to clearly diversify away from spot trading so the next time crypto pukes, you're not entirely dependent on degen volume to keep the lights on. Spoiler: It didn’t work.

(Source: Bloomberg) 

So Coinbase had a bad day…

And revenue got body-checked anyway. The stocks down -31% YTD while CFO Alesia Haas tried to spin it as "we outperformed the market on total trading volume" thanks to derivatives, but when you're losing two-thirds of a billion dollars, that's the equivalent of saying you lost the game but covered the spread. That said, Coinbase is having a revenge day mooning 15% on the day, presumably because Coinbase investors (like the rest of crypto) likes it rough. 

Meanwhile, the rest of the industry's in full survival mode. Gemini Space Station is cutting up to 25% of staff and pulling back internationally. Kraken's CFO bounced, and their Q4 revenue dropped sequentially. Robinhood saw crypto trading revenue fall 38%. Translation: The energy is not immaculate. 

(Source: Giphy) 

And just when Coinbase thought stablecoins might be the grown-up revenue stream that saves them, Congress decided to get involved. Draft legislation floating around D.C. could kill the rewards tied to stablecoin balances… a.k.a., he exact thing that makes Coinbase's Circle arrangement valuable. CEO Brian Armstrong already pulled his support for the bill in January, though they're still "sitting at the table" trying to hash out a compromise at the White House (read: begging regulators not to nuke their only reliable income stream.) That said, analysts are split on whether this is a "mid-cycle pullback" or the start of another crypto winter. Clear Street's Owen Lau says the price action looks manageable. Research firm Kaiko calls it "the halfway point of bear market." Woof. 

Meaning, Coinbase's entire thesis right now is that they've evolved past being purely a volume play… that derivatives, stablecoins, and institutional flows can smooth out the rollercoaster. And maybe that's true. But when Bitcoin drops 50% and you still post a $667 million loss despite all that diversification, it starts to feel like you've just added more seats to the same #getrekt ride. 

(Source: Imgflip)

To be fair though, Coinbase is definitely better positioned than it was in 2022. But "better positioned" and "actually insulated" are two very different things, and this quarter made it clear which one they are. So for now, be careful. And keep your head on the swivel, friends. Until next time… 

At the time of publishing, Stocks.News holds positions in Robinhood as mentioned in the article.