• Coinbase is expanding its operations into Europe amidst the crypto winter, closing its Japanese operations and laying off 18% of its workforce.
• The company experienced a surge in revenue and profit in 2021 due to mainstream crypto adoption, but the market crash has caused investors to withdraw their money from centralized exchanges.
• Coinbase is facing an existential danger due to the flight of traders from the market and needs to find a way to realign its efforts in order to survive.
Coinbase, one of the largest cryptocurrency exchanges in the world, is betting on big on European expansion as the crypto winter continues to chill trading activity in its home market. As the bear market takes its toll on the company, Coinbase has decided to close the majority of its Japanese operations and lay off 18% of its workforce in order to realign its efforts and battle the challenges posed by the bear market.
The company was riding high on the wave of mainstream adoption of cryptocurrencies at the end of 2021. Investors who had never purchased a stock or bond before were suddenly interested in trading popular tokens such as bitcoin, ether, and dogecoin on Coinbase. This wave of new clients contributed to the company’s record-breaking revenue and profits for 2021, with monthly active users increasing by over 300%. The company’s sales soared to $7.8 billion in 2021.
However, the crypto market was rocked by a significant stablecoin crash in May, causing the price of bitcoin to plummet to a two-year low and forcing investors to withdraw their funds from centralized exchanges such as Coinbase. The situation was further exacerbated when rival FTX collapsed in November, leading to an even greater flight of traders from the market.
Coinbase is now facing an existential threat due to these developments, and must find a way to realign its efforts in order to survive the crypto winter. The company is hoping that its expansion into Europe will be enough to turn around its fortunes, but many analysts are skeptical that it will be enough to save the company. Only time will tell if Coinbase will be able to weather the storm or if it will succumb to the harsh realities of the bear market.