Coinbase, the eight-year-old San Francisco-based private startup that is a trading platform for Bitcoin and other cryptocurrencies, announced its financial results for 2018 Tuesday night and said it envisions a wide range of scenarios for the market this year including a sharp drop in price.
The price of Bitcoin has skyrocketed in the last six months from $ 10,600 to more than $ 57,000 USD for Bitcoin, as companies like Tesla, PayPal and Square have emphasized buying reserves of the currency and made it possible for customers to carry out transactions in the currency.
Coinebase, which makes money from the volume of people transacting on its platform to buy and sell currencies, had 6.1 million users transacting, or MTUs, in the three months ending in March, it said.
To forecast this year, “Given the inherent unpredictability of our business […] we are providing a range of possible scenarios for the entire year 2021, “the company said.
The “high” scenario sees the overall market capitalization of cryptocurrencies continuing to rise, bringing Coinbase’s MTUs to 7 million.
A “medium” scenario “assumes flat crypto market capitalization,” the company said, and “low to moderate volatility” in cryptocurrency prices. That would possibly lower the MTUs to 5.5 million, he said.
The “low” scenario would see a “significant decline in crypto market capitalization, similar to the decline seen in 2018,” the company said, “and low levels of crypto asset price volatility thereafter.
The price of Bitcoin in 2018 fell from a high of more than $ 19,000 per Bitcoin to less than $ 4,000.
“In this scenario, we assume that MTUs will decrease accordingly and end 2021 at levels similar to Q4 2020.”
As for its own results, the rise in cryptocurrency prices has been a boon for the company’s turnover. Coinbase had $ 335 billion worth of trading volume on its platform in the March quarter, producing $ 1.8 billion in revenue. The company expects between $ 700 million and $ 800 million of net income from that activity.
Coinbase has received $ 539 million in venture capital financing since 2015 from firms including AH Capital Management LLC, Manhattan Venture Partners, Y Combinator, and Initialized Capital Management.