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Coinbase value plunges on report of shrinking revenue and declining users.

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Bitcoin, Ethereum, Dogecoin: What to know before investing in crypto

From Dogecoin to Bitcoin to Coinbase, cryptocurrency is the hottest trend in investing right now. Here’s what you need to know before buying in.

USA TODAY

Cryptocurrency trading platform Coinbase has lost half its value in the past week, including its biggest one-day drop ever on Wednesday as the famously volatile crypto market weathers yet another slump.

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Coinbase reported a $430 million net loss in the first quarter, or $1.98 per share, on declining sales and active users. Analysts were expecting profit of 8 cents per share. Revenue was down as trading volumes fell, and active monthly users declined 19% from the fourth quarter.

It’s unlikely those results surprised investors — Coinbase shares declined 43% in the four days leading up to their earnings release Tuesday. On Wednesday, shares fell 27%, to $53 per share. On the day of its initial public offering just 13 months ago, prices hit $429 per share.

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Why is Coinbase falling?

Patrick O’Shaughnessy, an analyst who covers Coinbase for Raymond James, acknowledged in a note to clients that there was an ongoing debate over whether the crypto market was in one of its typical funks or if this was the post-pandemic bubble deflating.

“While management strongly believes the former will prove to be true, we suspect there is more than a bit of truth to the latter, particularly with crypto failing to serve as an inflation hedge thus far in 2022,” O’Shaughnessy wrote.

Like much of Wall Street, O’Shaughnessy said his firm expects Coinbase to continue to lose money in the coming quarters, and that the “cons of increased crypto regulation down the road will decidedly outweigh the pros.”

Government officials have made it clear that regulation is coming. Treasury Secretary Janet Yellen said in April that more government oversight is needed in the fledgling industry and that over the next six months, Treasury would work with the White House and other agencies to develop reports and recommendations on digital currencies.

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