Employees work at the Coinbase Inc. office in San Francisco, California.

Michael Short | Bloomberg | Getty Images

Cryptocurrencies including bitcoin are reaching all-time high prices, but Wall Street is sending shares of cryptocurrency leader Coinbase lower after its Tuesday earnings and weak quarter for crypto trading.

Coinbase reported monthly transacting users fell from the prior period, dropping to 7.4 million from 8.8 million in the second quarter, though up from 6.1 million a year earlier. Trading volume fell to $327 billion from $462 billion in the previous quarter and it disappointed the street on quarterly revenue.

Losses narrowed after a Tuesday after-hours decline as steep as 13%, and some on Wall Street remain bullish on the company’s outlook with price targets as high as $500 — its shares were trading below $350 on Wednesday.

“We don’t think the sequential decline in revenue should have been a surprise,” BTIG equity analyst Mark Palmer told CNBC on Wednesday. He expects this quarter to be Coinbase’s biggest quarter ever after the slowdown in trading over the summer.

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In a shareholder letter, the company noted its business is volatile, and it tried to make the case it should not be thought about as “a quarter-to-quarter investment.”

A survey conducted among members of the CNBC CFO Council earlier this year found greater acceptance of bitcoin as a financial instrument, with more than half saying it is “for real,”