Coinbase: ‘Enough supply’ to survive 2022 crypto winter

The 2022 crypto winter has been a killer for a lot of cryptocurrencies out there, and even trading platforms are affected in a big way. However, Coinbase (COIN) is confident that they have what it takes to outlast the whole crypto crash until it gets stable once more.

The first half of 2022 has been rough for the crypto market, and there are no signs of the market being stable for the rest of the year. This just means that a lot of digital coins and tokens are in danger of going bankrupt if the market fails to shift into their favour. 

Cryptocurrency hasn’t always been this way. The market crash was due to rising interest rates in an effort to fight inflation. The crypto market was thriving well and even had a massive rally in 2021, only to lose a total of $2 trillion in value as the big bear market began. This has been a huge problem for a lot of coins, and not even Bitcoin was exempted.

Coinbase, however, believes that it can survive the rest of the crypto winter thanks to their abundance of supply. This has been the challenge for a lot of coins—some of them have already burned through their supply in the past few months.

Tough losses for Coinbase

The second quarter results for COIN have been more disappointing now than ever, and it even missed the Wall Street estimates in terms of revenue, trading volume and the assets held on the platform itself. However, the balance sheet for Coinbase makes it poised for longevity. Some analysts even say that it can manage to survive a prolonged crypto winter.

There are a lot of crypto that have suffered the same losses, but none of them were said to brave the rest of the crypto winter. The crypto shares were down over 5% in the past few weeks, and they have been trading below $89 at this point. 

According to MoffettNathanson partner Lisa Ellis, the fate of the whole crypto stock depends on how the exchange can hold more cash reserves. So far, this may be the saving grace that Coinbase can enjoy in the coming months. The same can be said for crypto betting sites such as Gamdom as they continue to thrive despite the crash.

Bet on your chances to win in Gamdom’s Crash

Coinbase’s strong reserves

Looking at Coinbase’s earnings in the second quarter, Ellis pointed out the fact that the platform had $5.68 billion in cash and cash equivalents. On top of that, the platform also holds an additional $500 million in Circle’s stabledoin, USDC, which pushes cash resources above their first quarter level to at least $6.2 billion.

To sum it up, Coinbase has no real worries when it comes to liquidity. They are not pressured to come up with more value since their own stock would be able to keep them afloat in the coming months or even years.

‘The implication of that is even if this crypto winter persists for another six quarters, which would be typical, that they last for a couple of years, they’ll still be sitting at around $5 billion in cash’, Ellis said.

So far, Coinbase has profited from their retail trading fees, with their cut of trades going up to 1.34% from the expected 1.24%. This is a huge note that the casual retail is actually holding up better for Coinbase than most people expected for any Bitcoin cryptocurrency variants out there.

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Words: Paul Daniel Flores