Coinbase Global's (COIN) second-quarter earnings, due after the market close on Tuesday afternoon, are expected to reflect continued challenging crypto market conditions.

Wall Street is bracing for another sequential decline in the crypto exchange's trading volumes as retail demand fades further during the current cryptocurrency bear market. The company will also face concerns surrounding cost controls and a recent Securities and Exchange Commission (SEC) probe into certain listings.

The question at hand, though, is how much this has been priced into a stock that at its worst levels was recently down nearly 90% from an all-time high hit late last year. A near-doubling in the shares since July 1 suggests investors may be looking past the bad news to the next phase of growth.

Coinbase shares have rallied late this week despite slipping cryptocurrency prices after the company announced a partnership with BlackRock (BLK) to provide the asset management giant's institutional clients direct access to Coinbase's trading custody, prime brokerage and reporting platforms.

Volumes

Sell-side analysts expect a sizable decline in Coinbase trading volumes from the $309 million reported in the first quarter. Needham's John Todaro n who has a buy rating and $89 price target on COIN (current price is $93) n anticipates a 39% drop.

With volumes down, defending market share will be key, and Mizuho expects a big drop there as well n to 2.9% of global trading volume in July versus an average of 5.3% in the first quarter.

The decline in volumes and market share suggests Coinbase is being pressured by zero-fee trading platforms, but DA Davidson's Chris Brendler called such fears "overblown."

l__It misses the significant diversity within retail, underestimating the power of simplicity,r said Brendler in a note to clients. "Despite below-consensus expectations for Q2 and beyond, we're sticking with Coinbase as we believe the 2022 lcrypto winterr will ultimately work to its advantage.r He has a buy rating and $90 price target on the stock.

Read more: Coinbasers Stock at Crossroads as Cathie Woodrs Ark Sells Some

Regulatory

Investors will also be looking for comments from Coinbase surrounding a report of an SEC probe into whether it listed unregistered securities, and another investigation into insider trading related to a former product manager.

lWhile the trading in these securities is likely not material, the results of the insider trading cases could set a precedent over which cryptocurrencies are deemed securities, and thus whether or not COIN and other digital asset exchanges should obtain necessary regulatory licenses,r Goldman Sachs (GS) analyst Will Nance said in a note to clients.