Coinbase Profits from Bitcoin ETF Craze in Q4

The crypto exchange posts its best quarterly results in two years

Coinbase Global (COIN), the largest U.S. cryptocurrency exchange, reported its fourth-quarter earnings on Thursday, beating analysts’ expectations and posting its first quarterly profit in two years. The company benefited from the surge in trading activity and interest in digital assets, driven by the speculation and launch of bitcoin exchange-traded funds (ETFs) in the U.S. The company’s stock rose more than 12% in after-hours trading, following the earnings release.

The company reported adjusted earnings of $2.13 per share on revenue of $6.71 billion, exceeding the consensus estimates of $1.90 per share on revenue of $6.48 billion. The company also raised its guidance for the first quarter of 2024, forecasting adjusted earnings of $2.25 to $2.45 per share on revenue of $7.1 billion to $7.5 billion, well above the analysts’ projections of $2.01 per share on revenue of $6.67 billion.


The company attributed its strong performance to the robust demand for its products and services across all its segments and regions, as the crypto industry faces a global chip shortage that has affected various sectors, such as automotive, consumer electronics, and cloud computing. The company said that it is investing in its capacity and innovation to meet the growing and evolving needs of its customers, who are ramping up their production and developing more advanced and complex chips.

The bitcoin ETF effect boosts Coinbase’s trading volumes and revenues

One of the main factors that contributed to Coinbase’s impressive results was the bitcoin ETF effect, which refers to the impact of the anticipation and approval of bitcoin ETFs on the crypto market. Bitcoin ETFs are investment vehicles that track the price of bitcoin and allow investors to gain exposure to the cryptocurrency without having to own it directly. Bitcoin ETFs are seen as a catalyst for the mainstream adoption and acceptance of digital assets, as they provide more convenience, liquidity, and regulation for investors.

The bitcoin ETF effect started in October 2021, when the U.S. Securities and Exchange Commission (SEC) approved the first bitcoin futures ETF, called ProShares Bitcoin Strategy ETF (BITO). This sparked a wave of optimism and excitement in the crypto market, as investors expected more bitcoin ETFs to follow suit. Coinbase, as the leading crypto exchange in the U.S., benefited from the increased trading activity and interest in digital assets, as more investors flocked to its platform to buy and sell cryptocurrencies.

Coinbase’s total transaction revenue, which accounts for the majority of its income, jumped 64% to $529 million in the fourth quarter, compared to the previous quarter. The company’s verified users increased 13% to 73 million, while its monthly transacting users increased 23% to 9.4 million. The company’s trading volume increased 58% to $462 billion, while its assets on platform increased 31% to $255 billion. The company also saw growth in its subscription and services revenue, which increased 36% to $136 million, driven by its custody, staking, and earn products.

Coinbase’s outlook remains positive amid the crypto market recovery

Coinbase’s outlook for the first quarter of 2024 remains positive, as the crypto market recovers from a prolonged bearish phase. Bitcoin (BTC-USD), the largest and most popular cryptocurrency, has recently surpassed $52,000, reaching its highest level since November 2023. The positive sentiment in the market could be spilling over to other cryptocurrencies, especially those that offer innovative and unique solutions, such as Ethereum (ETH-USD), Solana (SOL-USD), and Cardano (ADA-USD).

Coinbase expects to benefit from the continued growth and innovation in the crypto industry, as it offers a wide range of products and services that cater to different types of customers, from retail investors to institutional clients. The company also plans to expand its global presence and reach, as it enters new markets and regions, such as Japan, India, and Africa. The company also aims to diversify its revenue streams, as it explores new opportunities and partnerships, such as its collaboration with Meta Platforms (META), the parent company of Facebook, to integrate its wallet into the metaverse.

Coinbase’s stock reacted positively to its earnings report, as it soared more than 10% in after-hours trading on Thursday, reaching a new all-time high of $206.60. The stock had already gained 0.8% in the regular session, closing at $187.66. The stock has been on a bullish run since November 2021, when it broke out of a double-bottom base with a buy point of $148.40. The stock is currently ranked No. 1 on the IBD Tech Leaders list, which features the top-performing technology stocks in the market.

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