Coinbase: Possible ‘Significant’ drop in crypto prices this year like in 2018

Coinbase offered a wide range of possibiities this year, citing market uncertainty.
Written by Tiernan Ray, Senior Contributing Writer

Coinbase, the eight-year-old, privately held, San Francisco-based startup that is a trading platform for Bitcoin and other crypto-currencies, Tuesday evening announced its financial results for 2021, and said it foresees a wide range of scenarios for the market this year, including a sharp drop in price.

Bitcoin's price has soared the past six months from $10,600 to over $57,000 U.S. dollars per Bitcoin, as companies such as Tesla, PayPal, and Square have emphasized buying reserves of the currency and making it possible for customers to transact in the currency. 

Coinbase, which makes money off the volume of people transacting on its platform to buy and sell currencies, had 6.1 million transacting users, or MTUs, in the three months ended in March, it said. 

To forecast this year, "Given the inherent unpredictability of our business […] we are providing a range of possible scenarios for full-year 2021," the company said. 

The "high" scenario sees the overall market capitalization of crypto continuing to increase, pushing up Coinbase's MTUs to 7 million. 

A "mid" scenario "assumes flat crypto market capitalization," the company said, and "low to moderate volatility" in crypto prices. That would possibly reduce MTUs to 5.5 million, it said.  

The "low" scenario would see a "significant decrease in crypto market capitalization, similar to the decrease observed in 2018," the company said, "And low levels of crypto asset price volatility thereafter. 

Bitcoin's price in 2018 plunged from a high of over $19,000 per Bitcoin to under $4,000. 

"In this scenario, we assume MTUs will decrease in a corresponding manner and end 2021 at similar levels to Q4 2020."

As for its own results, the surge in crypto prices has been a boon to the company's volume of business. Coinbase had $335 billion worth of trading volume on its platform in the March quarter, producing $1.8 billion in revenue. The company expects $700 million to $800 million of net income from that activity.

Coinbase has received $539 million in venture capital financing since 2015 from firms that include AH Capital Management LLC, Manhattan Venture Partners, Y Combinator, and Initialized Capital Management. 

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