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Coinbase stock (NASDAQ:COIN) plummeted 11% Wednesday after the American cryptocurrency exchange reported third-quarter earnings that missed Wall Street's expectations.

Revenue: $1.31 billion versus $1.61 billion estimated by FactSet

EPS: $1.62 a share versus $1.81 estimated by FactSet

The largest crypto exchange in the U.S. is also seeing a low trading volume, driven mainly by lower levels of volatility, the company said.

Listing popular-meme burgeoning meme-based tokens such as Dogecoin and Shiba Inu couldn’t help Coinbase push its trading volume. In the 3^rd quarter, the trading volume on Coinbase plummeted to $372 compared to $426 in the 2^nd quarter.

Still, the letter of Coinbase to shareholders said "market conditions improved meaningfully later in the quarter which we have continued to see into early" into the fourth quarter. Bitcoin and Ether are leading the crypto market by breaking record highs this week following weaker dollar and bigger interest from banks.  

FTX founder and CEO Sam Bankman-Fried on Twitter said the exchange is "probably in line for a good Q4!" The 29-year-old crypto billionaire highlighted Coinbase's third-quarter volume, which stood at $600 million.

Bitcoin and Ether trading volume declines

With Coinbase adding more cryptocurrencies, Bitcoin’s share of the total trading volume declined to 19% from 24% in the 2^nd quarter and 39% in the 1^st quarter. Meanwhile, the trading volume of Ether decreased to 22% in the 3^rd quarter compared to 26% in the 2^nd quarter.

On the other hand, Coinbase added that its monthly transacting users plummeted to 7.4 million in the 3^rd quarter from 8.8 million in the 2^nd quarter. However, it is still higher than 6.1 million in the same period last year.

"As our year-to-date results have clearly demonstrated, our business is volatile," the company said in its shareholder letter. "Coinbase is not a quarter-to-quarter investment, but rather a long-term investment in the growth of the cryptoeconomy and our ability to serve users through our products and services. We encourage our investors to take this point of view."

Nonetheless, 3^rd quarter subscription and services revenue surged by 41% to $145 million against $103 million in the 2^nd quarter.

"Despite the quarterly miss, we point to a number of positive quarterly metrics: Both trading volumes and [monthly transacting users] exceeded Street's expectations," Wedbush analysts said in a note, while giving Coinbase stock an outperform rating.

Meanwhile, Coinbase is also actively diversifying its services from launching an NFT platform to derivatives trading.