Coinbase CEO Brian Armstrong Expects Crypto Bear Market to Last 12-18 Months, Plans to Continue Cost Cuts

Coinbase Chief Executive Brian Armstrong said he expects the crypto winter to last around 12-18 months, but is also preparing for the possibility of it lasting longer.

While bitcoin has lost almost 55% since the start of the year, Coinbase COIN,
posted a net loss of $1.09 billion in the second quarter, while it reported a net profit of $1.61 billion in the previous quarter. Shares of the crypto exchange are down more than 70% year-to-date, according to Dow Jones market data.

Still, Armstrong said the market downturn was “not unusual” for the company, according to a CNBC interview on Tuesday. “We’ve been through four cycles like this as a business. We are only 10 years old. This just coincides with the larger macro environment collapsing,” Armstrong said.

The crypto exchange has been looking for ways to cut costs, Armstrong said. It is looking to cut costs related to marketing, external vendors and Amazon Web Services, according to the CNBC interview.

In June, Coinbase laid off 18% of its employees, citing rapidly changing economic conditions, cost management needs, and the company’s previous over-hiring.

Armstrong also said the company aims to “get to a place where more than 50% of our revenue is from subscriptions and services” as increasing competition between crypto exchanges could drive down trading fees.

“I think there’s going to be some margin compression, that has to happen eventually at some point because whatever we build, you know, others eventually build it and it will become a little more commoditized” , Armstrong said.

Coinbase’s subscription and services generated 18% of its revenue in the second quarter, compared to just 4% two years ago.

For mergers and acquisitions, Armstrong said the company is “looking closely at every transaction that’s happening right now.” They haven’t seen prices drop dramatically, “but we’re early in the cycle, and it’s not all about price,” Armstrong said.

Coinbase shares are trading at around $72.00, up 0.6% on Tuesday.


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