Coinbase seems to have its fate tied to Bitcoin, if recent events are anything to go by. With the current Bitcoin bear market, Coinbase has also seen a large decrease in its App downloads. According to reports, the previously high ranking application in downloads, recently fell to 40th place in a US finance apps ranking done in June. The downward spiral coincides with Bitcoin’s price fall since the beginning of the year. Back then, Coinbase’s downloads reached an all time high in December, consequently topping the finance app charts.
The top crypto trading platform boasts of having exchanged over $150 billion worth of cryptocurrencies to date. Quite obviously, Bitcoin, the premier coin in the crypto space, carries the bulk of the trades. But Bitcoin has since lost about two thirds of its value, taking the digital currency platform back to the store position it held in April 2017.
Even so, Coinbase Co-founder and CEO Brian Armstrong, is not particularly bothered by the reports. He took to twitter to express his feelings on the matter, claiming that down times are welcome as at worst, they weed out the people in the market for wrong reasons. He maintains that the current situation does not define the fate of cryprocurrencies. In retrospect, bitcoin in particular, has had its own share of lows and highs. As such, crypto enthusiasts keep a positive attitude as they have been here before.
5/ After many years of this, I've come to enjoy the down cycles in crypto prices more. It gets rid of the people who are in it for the wrong reasons, and it gives us an opportunity to keep making progress while everyone else gets distracted.
— Brian Armstrong (@brian_armstrong) June 19, 2018
Armstrong’s opinion could hold some truth. While Bitcoin and other general alt coins have attracted investors, the bulk of crypro traders are retail traders who have been proven to hold a ‘fickle’ attitude towards cryptocurrencies. They engage mostly in speculative investments rather than believing in the long-term potential of the technology. This attitude has been repeatedly reinforced by central banks bashing crypto currencies amidst fears of money laundering.
Read: Brian Armstrong Profile
The ranking may also not truly reflect the actual picture of the platform’s performance. To begin with, app downloads usually are a one-time action. Unless users change devices, new downloads come from new crypto users. This means that Coinbase still has its million users trading on the platform. As it is, the platform shows stellar performance with a valuation at $ 8 billion up from $1.6 billion in 2017. Within the same period, the company that makes its profits by charging fees on transactions raked in $ 1 billion in profits. Additionally, Coinbase has a web based platform where users get to perform the same transactions without necessarily downloading the app.
Read our Coinbase Review
Coinbase also has a secondary service in digital assets management where it stores coins for family offices and hedge funds. It claims to have managed over $ 20 billion for investors. Just last month, they announced a new ‘Coinbase Custody’ aspect of the management that complies with the Security & Exchanges Commission requirements, uses Electronic Transaction Clearing (ETC) and is a FINR-member independent broker-dealer. This is another front that continues to bring in revenues for the company.
While similar traders and exchanges shift their operational bases to less strict countries, Coinbase has stuck and complied with several regulations. This is could be a bid in effort to lend cryptocurrencies legitimacy and consequently managing the current extreme volatility. Bitcoin rose to over $19,000 a coin in December, yet today, it hovers around $6,000. While a fall in prices would ideally increase investments as more people would then afford to invest in cryptos, the type of run-away volatility makes it highly unstable making new investors fearful.
It is impossible to accurately predict the future of Cryprocurrencies so the fate of Coinbase remains a wait and see.