Leading crypto broker Coinbase (COIN) reported 1Q22 earnings after the close Tuesday and its report suggests that crypto’s moment of truth is approaching. With Bitcoin being halved in the last six months, interest in crypto and resultant crypto trading volumes are plummeting. COIN’s 1Q22 trading volume fell 44% from 4Q21 to $309 billion. Monthly Transacting Users fell from 11.4 million to 9.2 million. Both declined further in April to $74 billion and 8.9 million, respectively. COIN shares are off another 15% in the after hours after closing at all time lows.
Bigger picture, the question many of us have been wondering about for years is likely to be answered before the bear market is over: Is crypto a legitimate new financial asset or is it essentially a fad? In an extensive blog post one year ago, I characterized three philosophical positions toward crypto: conservative/skeptical, radical and agnostic. For years the radicals – who believe crypto is here to stay – have had the ball. The recent weakness in crypto and especially the consequent waning interest in the space as evidenced by COIN’s results should bring out the agnostics and skeptics. I still count myself somewhere between the conservative/skeptical and agnostic positions and eagerly await the drama to come.