Coinbase Could Really Do With Crypto Picking Back Up

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What's going on?

Coinbase reported worse-than-expected earnings late on Tuesday.

What does this mean?

Last quarter was another tough one for crypto, with prices down across the board and investor activity dropping precipitously. That caused the value of trades on Coinbase’s platform to more than halve from the same time last year, and brought the company’s overall revenue down by a worse-than-expected 61%. So it follows that the company reported a record $1.1 billion loss for the quarter, which was a far cry from the $1.6 billion profit of the same time last year. Investors initially sent its stock down 7%, which – on top of an 11% drop the day before – means its stock has now lost almost two-thirds of its value this year.

Why should I care?

Zooming in: Bitcoin bros turn scaredy cats.
Bitcoin represented 31% of the value of all trades on Coinbase’s platform last quarter – up 6 percentage points from the quarter before, and the highest it’s been since early 2021 (tweet this). That suggests investors have been seeking out the relatively secure embrace of the OG crypto. They seem to have abandoned their “to the moooon” approach too: Coinbase said its customers are increasingly lending out their coins to earn interest, or “staking” them in hopes of being rewarded with more in return.

The bigger picture: Coinbase hits upon a money-spinner. Sort of.
BlackRock – the world’s biggest asset manager – announced last week that it’ll be partnering with Coinbase to offer bitcoin trading to its institutional clients, which could significantly boost trading volume on Coinbase’s platform. But don’t be fooled: Coinbase charges the heavy-hitters much lower fees than proles like us, so it won’t necessarily lead to a proportionate increase in revenue.

Originally posted as part of the Finimize daily email.

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