The consumer trading volume of Coinbase has dropped to $56 billion in the first quarter of 2024. This is in comparison to the fourth quarter of 2021, a time when the crypto market was experiencing a massive bull run. This is credited to the market attaining maturity since the approval of the Spot Bitcoin ETF. The crypto exchange platform’s revenue is also under pressure, particularly in comparison to the fourth quarter of 2023.
The trading volume is what generates revenue for Coinbase. Hence, a drop is worrisome. However, Coinbase remains confident about a brighter future. The company is now expected to rely on its diversification, like revenue share on USDC stablecoin. It also serves as a custodian for five Spot Ether ETFs.
Volatility has determined market maturity. It is down, on average, to 57% from a high of 79% in 2021. Plus, crypto prices are already high; traders and investors speculate that the prices will rise, but the pace may not be as attractive as it was during high volatility. Bitcoin ETFs have facilitated orderly inflows and reduced chaos. As a result, it enables retail and institutional investors up earn decent profits without owning a share of them.
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Alesia Haas, the Chief Financial Officer of Coinbase, has stated that the volatility of Bitcoin and Ethereum has started to come on the grid.
Bobby Zagotta, the Chief Executive Officer of Bitstamp USA, has echoed those sentiments. Bobby has said that the market is more mature today and is less likely to have wild swings, adding that it will still be volatile with some upward momentum in the prices of Bitcoin and other cryptocurrencies.
Thomas Perfumo, the Head of Strategy at Kraken, has said that there might not be a lot of repeats—something that they have seen in the previous markets in terms of growth.
Coinbase is now aiming to mark an uptick of 20% in its next revenue report. The platform will explore more diversified ventures within the ecosystem to generate this, rather than solely relying on Bitcoin trading fees. Being a custodian of five Spot Ether ETFs could come in handy. The SEC has approved 19b-4 and could soon give a green light to the registration form. That would allow platforms to launch the Spot Ether ETF’s trading operations officially. There is no tentative timeline for this, but the community expects it to happen by the end of this year.
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Lower volatility also contributes to Coinbase’s share value. According to some analysts, the stock has gained approximately 40% so far in 2024, even though it is below 30% of the ATH that was banked in late 2021. Coinbase is expected to leverage the benefits of market maturity in the long term as it continues to diversify the venture. This will positively impact its revenue, enabling Coinbase to have higher earnings.
