Coinbase, the eight-year-old San Francisco-based private enterprise that is a trading platform for Bitcoin and other cryptocurrencies, announced its 2018 financial results on Tuesday night, saying it provides a wide range of market scenarios, including: a sharp drop in price.
The price of Bitcoin has risen over the past six months from $ 10,600 to more than $ 57,000 US dollars per Bitcoin, as companies such as Tesla, PayPal and Square have focused on buying reserves of the currency and making it possible for customers to conduct transactions in the currency.
Coinebase, which makes money from the amount of people trading on its platform to buy and sell currencies, had 6.1 million transactions, or MTUs, in the three months ended in March.
To predict this year, ‘Given the inherent unpredictability of our business […] we offer a range of possible scenarios for the full year 2021, ‘the company said.
In the ‘high’ scenario, the overall market capitalization of crypto is still increasing, raising Coinbase’s MTUs to 7 million.
An “intermediate” scenario “assumes flat crypto-market capitalization,” the company said, and “low to moderate volatility” in crypto-prices. That could potentially reduce MTUs to 5.5 million, he said.
The “low” scenario will see a “significant decline in crypto-market capitalization, similar to the decline observed in 2018,” the company said, “and a low volatility in the crypto-asset price.
Bitcoin’s price fell in 2018 from a high of more than $ 19,000 per Bitcoin to below $ 4,000.
“In this scenario, we assume that MTUs will decline correspondingly and end 2021 at the same levels as Q4 2020.”
In terms of its own results, the increase in crypto prices has been a blessing in disguise for the company’s scope. Coinbase had $ 335 billion in trading volume on its platform in the March quarter, generating $ 1.8 billion in revenue. The company expects net income of $ 700 to $ 800 million from the activity.
Coinbase has received $ 539 million in venture capital financing from companies including AH Capital Management LLC, Manhattan Venture Partners, Y Combinator and Initialized Capital Management since 2015.