Moody’s downgrades the Coinbase bitcoin exchange from “Ba2” to “Ba3” and further downgrades it. Analysts explained the move with negative market conditions for cryptocurrencies.

Coinciding with the issuer’s default rating decision, the agency downgraded Coinbase’s Guaranteed Senior Unsecured Ratings from Ba1 to Ba2.

The downgrade reflects a significant drop in revenue and cash flow due to the sharp decline in digital asset prices. […] and weakening of customer effectiveness, says the press release.

Experts recalled that the company’s revenue model “relies on trading volumes, transaction activity per user, and overall prices of crypto assets.”

The agency will revise Coinbase’s rating upwards if the company shows profits during a bear market and is able to diversify its earnings through trading and other flows unrelated to the prices of cryptocurrencies. According to the first quarter results, this aspect accounted for 87% of the net income of the bitcoin exchange.

The company has made two bond issuances totaling $2 billion, which will mature in 2028 and 2031.

Recall that in January-March 2022, Coinbase took a net loss of $429.7 million, nearly double the analysts’ expectations.

Against the backdrop of a weak start to the year and a downturn in the cryptocurrency market, the cryptocurrency exchange has started optimizing costs.

Earlier, the company’s CEO, Brian Armstrong, revealed that around 18% of employees are down due to the start of the crypto winter.

In June 2022, competitor Binance.US reset fees for a number of trading pairs.

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