It is a bold bet in which Coinbase (COIN) has embarked.
The crypto trading platform has just opened its non-fungible token trading platform to everyone on May 4, two weeks after its launch.
But the first returns are not likely to reassure on this part of the diversification of the firm. Indeed, the signals are red or even worrying.
Figures compiled by various data firms show that Coinbase has not yet managed to compete with the dominant marketplaces in this segment of the crypto sphere. The performance of the most popular digital currency exchange in the United States is very disappointing. Coinbase has not taken advantage of its name to gain a lion share of the market.
Users Are Declining Day by Day
These figures pale in comparison to OpenSea for example. The first marketplace of NFTs displays a trading volume of $3,610,913,189, a total transaction of 2,377,284 and recorded 367,231 users since April 20.
Besides OpenSea, Coinbase is also well behind other marketplaces like LooksRare. This last marketplace recorded a trading volume of $1,655,729,165, a total transaction of 39,422 and had 23,108 users since April 20.
Data shows that the number of users of Coinbase’s NFT marketplace is decreasing day by day. It seems that there was a curiosity effect during the first days, but this is not enough to bring users back.
Contacted by TheStreet, Coinbase did not respond immediately.
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The very sluggish beginnings of Coinbase NFT raise questions about this service, which the firm sees as a growth driver. Coinbase is betting that these digital property titles are a long-term economic opportunity.
The problem is that the context between Coinbase’s announcements and the launch of this NFT marketplace has completely changed and not in a good way.
The euphoria around NFTs, the buzzword at the end of 2021 and the beginning of 2022, has died down. We are living a bit of a return to earth for these digital title deeds.
“The incredible enthusiasm for NFTs led to tremendous growth of the NFT industry in 2021,” NonFungible, the world’s largest NFT data resource, said recently in a report. “The early days of 2022 mark a new era for NFTs, with many changes to the market.”
“With nearly $8 billion traded in the first quarter of 2022, the market cannot really be considered to have collapsed. We are seeing more of a form of stabilization, in line with the last quarter of 2021,” the report showed.
Market Cap Is Down $38.4 Billion YoY
But “conversely, the volume of sales fell by nearly 50%, with a very marked slowdown in the volume of buyers and sellers. The great novelty of this quarter is undoubtedly the evolution of profitability in the markets.”
“Making a profit in NFTs is no longer so easy in 2022,” the data firm concluded.
In addition, Coinbase is entering a now very competitive sector: its rivals Binance and FTX already have their NFT marketplaces.
“In a year in which profitability may be challenged, we question the strategic rationale of chasing NFTs, especially as interest in NFTs appears to be dwindling,” Dan Dolev, analyst at Mizuho, wrote to its clients early April.
Coinbase’s market cap is now at $27.1 billion from $65.47 billion when it was listed on the stock market a year ago. It has thus shrunk by $38.4 billion in a year. Shares are down 60.7% compared to a year earlier.