Crypto companies have spent years monetizing volatility, but now they are trying to survive without it.
The first quarter results underscored that the era of easy moonshots and hype-driven returns in cryptocurrencies is coming to an end. Than lower Bitcoin And ether Prices reduced speculative demand – and investors largely retreated from risk assets amid macroeconomic uncertainty – stock market trading activity cooled and retail investor participation declined. The slowdown was evident in quarterly updates from publicly traded companies, with exchanges, brokers and crypto finance firms reporting weaker transaction and staking revenue as well as weaker customer activity.
It’s nothing new Coinbase And Robinhoodfor whom trading was once the lifeblood of their platforms. Both have been working for years to diversify their revenues by expanding their financial services offerings.
But even non-trading companies still operate in an industry characterized by the boom-and-bust cycles of cryptocurrency. And first-quarter results — particularly from companies that hit the public markets last year — showed a greater urgency to prove they can generate stable sales even as prices and volumes fall.
“For many years [investors] “With this wave of crypto madness we helped…it was a new way for people to get out and trade,” said Vassilis Tziokas, vice president of growth at Matter Labs. “But we are now seeing crypto becoming something bigger, something that is intertwined with the real economy, which means people have high expectations of these companies.” They need to diversify their revenues and expand their operations into new adjacent industries.”
Robinhood opened the crypto earnings season with a notable miss as crypto trading revenue plunged 47%. Meanwhile, user activity shifted to other products – particularly event contracts – driving the segment up 320% year-over-year to generate $147 million in revenue.
Although Coinbase’s revenue and profits fell short of expectations, the company saw promising growth across its diversified offerings, including event contracts, crypto derivatives (which saw a 169% increase over the same period last year), and tokenized commodities.
“We’re trying to diversify the things that people can trade so that as markets change and behaviors change, we always have something that people want to trade,” Coinbase CFO Alesia Haas told CNBC. “This diversification will help curb some of the volatility we have seen in pure crypto trading.”
Diversified trade and infrastructure
Geminithe crypto exchange founded and run by the Winklevoss brothers, is also prioritizing stabilizing revenue that otherwise fluctuates with crypto prices by expanding into forecasts, derivatives and soon stocks – and having more of the financial infrastructure to achieve this internally. The company also reported a 292% jump in year-over-year sales, which factored into its profits from its consumer credit card.
The goal is to “move from a purely crypto-centric company to one that is more tied to markets… that should in some ways smooth out our revenues,” Gemini President Cameron Winklevoss told CNBC. “So if one asset class underperforms another, that should be offset and give you a more indexed approach to those different asset classes.”
Shares rose on a more upbeat earnings report than Gemini’s rivals, as well as the announcement of a $100 million investment in that future.
Bullish is another company addressing its revenue problems with expansion plans. The exchange’s planned $4.2 billion acquisition of global transfer agent Equiniti is among the largest M&A deals in cryptocurrency history. This positions the company as a capital market infrastructure company and not “just” a crypto exchange. The stock rallied on the takeover news and later sold off due to lost profits.
And although Circle Since Bitcoin is more protected from trading volatility, it is not safe from the crypto cycle that still drives the USDC stablecoin’s usage, liquidity and adoption. The company reported a strong quarter, but its Arc blockchain, an operating system for the agent-based AI-driven economy, attracted the most attention, easing concerns about its long-term viability as a stablecoin issuer. The stock rose about 20% and even cautious analysts increased their price targets on the stock.
Accumulators became asset managers
Even crypto treasury firms, publicly traded companies whose sole purpose is to purchase large amounts of crypto to provide shareholder access to them, are structurally tied to crypto cycles as well.
Michael Saylors strategy The clearest example of this came when the company moved away from its “never sell” Bitcoin approach and instead gave shareholders a more active management atmosphere. Management announced the turnaround in its earnings release as Strategy reported a net loss of $12.5 billion due to the Bitcoin price collapse.
“We will sell Bitcoin if it is beneficial to the company,” Strategy President and CEO Phong Le said on the call. “We’re not going to sit back and just say, ‘We’re never going to sell Bitcoin.'”
In bull markets, the strategy of issuing stocks or raising capital to buy more Bitcoin may be strategically simple, but in downturns this game becomes riskier, unsettling some investors.
In Sharplinks Given the gains, Ether Accumulator repeated the same theme when making the eye-catching announcement that it has committed Galaxy Digital to help him invest part of his capital in actively managed on-chain strategies. Wall Street welcomed the “disciplined” and “differentiated” approach to development as companies seek to decouple investor returns from calm markets.