On Tuesday, Coinbase Global Inc reported a bigger-than-expected quarterly loss as investors shunned cryptocurrency trading amid fears of a plunge in risk assets this year, sending its shares down 6%.

Trading volumes on cryptocurrency exchanges more than halved in the second quarter to $217 billion, with retail volumes down 68% and institutional volumes down 46%.

Investors have shifted speculative assets from stocks to cryptocurrencies this year amid concerns that aggressive central bank tightening could tip the US economy into recession.

That has led to a 50% drop in cryptocurrency bellwether Bitcoin in 2022 and forced layoffs at several companies, including Coinbase, which derives most of its revenue from transaction fees.

Cryptocurrency exchanges expect trading volumes in the third quarter to be lower than during the reporting period.
Morningstar Research equity analyst Michael Miller said: “If Coinbase wants to avoid missing targets and maintain the credibility of its ability to limit cash burn, they may need to continue cutting costs.”

The company aims to keep adjusted core losses close to $500 million this year.

The company reported an adjusted loss of $4.76 per share in the April-June quarter, compared with analysts’ expectations of $2.65, according to Refinitiv IBES data.

Revenue fell 63% to $808 million, missing consensus estimates.