Coinbase CEO Brian Armstrong is warning investors to brace themselves for a long crypto winter

by Arthur · August 25, 2022

Investors should rally because crypto winters — the popular term for the industry’s periodic downturns — could last another 12 to 18 months, Coinbase CEO Brian Armstrong said Tuesday.

In an interview with CNBC, Armstrong suggested that while he hopes the bear market ends during that time, the largest US crypto exchange is preparing for an even more extensive decline.

“We’re all hoping it will be, you know, 12 to 18 months and a nice recovery, but obviously you have to plan for it to be longer than that. And that’s how we think about it. And we’re not trying to get too cute with to predict the future, Armstrong told CNBC.

Still, the Coinbase CEO said the company has been through four crypto downturns in 10 years and is prepared to adapt to the cold until warmer days come.

“If we just don’t get distracted and we continue to build good products, we’re going to be fine for the next five or 10 years,” Armstrong said.

Most of the company’s revenue is tied to trading volumes on the crypto exchange, but Armstrong said Coinbase is increasingly moving its business toward what he called “subscriptions and services,” which could help bring more consistency to the company’s finances. Subscriptions and services now make up 18% of the company’s revenue, he said.

“I’d like to get to a place where more than 50% of our revenue is subscriptions and services,” he told CNBC.

While the company’s revenue in the fourth quarter of last year jumped more than 300% year-over-year and beat expectations by more than half a billion dollars, Coinbase missed analysts’ expectations in both the second and first quarters of 2022, with net income year-over-year. fall by 60% and 27% respectively.

In light of the recent setbacks caused by the crypto winter, Armstrong said the company is cutting costs in marketing, third-party vendors and Amazon Web Services. The company also laid off about 1,100 people, or 18% of its workforce, as it looked to cut staffing costs in June.

While Armstrong did not rule out future layoffs, he told CNBC that it was intended to be a one-time event.

The news hasn’t been all bad for Coinbase. Despite falling prices, the company earlier this month announced a partnership with BlackRock, the world’s largest asset manager, to offer its institutional clients access to crypto trading through its platform. The announcement sent Coinbase’s share price up 18% to $95.47, before the gains of recent weeks were pared. Coinbase stock closed Tuesday at $71.18, down 0.41%.