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Coinbase bets on big financial firms as Bitcoin ETFs ‘unlock a flywheel’ of new traders – DL News
- Coinbase’s quarterly trading volume for small investors is down 53% from Bitcoin’s 2021 peak.
- The company says it is looking to increase trading from institutional clients.
Coinbase first quarter result revealed a notable decrease in small investor participation compared to the 2021 cryptocurrency bull run.
At the same time, it is rolling out a slew of products aimed at financial professionals, trying to take advantage of a shift in the market as exchange-traded funds attract a new group of investors.
Coinbase saw $56 billion in trading volume from small investors, down 53% from the 120 billion dollars during the same period in 2021, although Bitcoin has risen higher this year than then.
Table of new traders
The launch of nearly a dozen Bitcoin spot ETFs has introduced crypto to a wider range of traders, including an influx of institutional investors attracted by soaring yields and relatively low counterparty risk.
This frenzy helped Bitcoin reach an all-time high of over $73,000 on March 14.
ETFs “unlocked a flywheel of client engagement across this more robust product suite,” which now includes custody, trading, funding and staking with institutional clients, the company said.
ETFs were a “tide that lifted all ships,” CFO Alesia Haas said at a news conference. call for results.
This helped Coinbase surpass $1.6 billion in the first quarter, more than double that of the same period last year and above analyst targets of around $1.37 billion.
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Institutional trading revenue during the quarter was $85 million, up 133% from the fourth quarter of last year. Institutional trading volume has doubled since the fourth quarter of 2023 to reach $256 billion.
New criminals
Haas also said the company launched derivatives this year, adding 15 so-called perpetual futures contracts that are popular with large trading firms.
“Our goal here is to gain liquidity, build market share and really establish ourselves,” she said.
Coinbase said nearly 40% of institutional customers used at least three Coinbase products during the quarter.
Falling stocks
Coinbase shares fell 4.5% in premarket trading as investors weighed the crypto price decline since the end of the quarter.
Coinbase shares tend to follow Bitcoin’s gains as the cryptocurrency’s rise drives demand for the exchange’s trading services and other offerings.
Bitcoin – down more than 15% since March 31 – accounted for a third of all trading volume on the platform.
The exchange recorded $935 million in consumer transaction revenue, up 100% quarter over quarter.
The quarter’s profit included a $650 million gain on the value of cryptocurrency assets held by the company, helped by changes in accounting rules.
Under the new rules, companies must regularly update the value of digital assets to their current market price, and any changes in value must be reflected in their reported profits.
Crypto market players
- Bitcoin is up 4% in the past 24 hours to around $61,139.
- Ethereum gained 2.3% to around $3,049.
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Sebastian Sinclair is markets correspondent for DL News. Do you have any advice? Contact Seb at sebastian@dlnews.com.