Coinbase surged 12% on Friday in U.S. premarket trading after the company revealed its first profit in two years. The largest U.S. exchange for buying and selling cryptocurrencies reported a net income of $273 million in the fourth quarter, marking a significant turnaround since the same period in 2021.
Coinbase’s net revenue for the fourth quarter of 2023 was $905 million, up nearly 50% from the previous year, driven primarily by transaction revenues. Subscription and services revenue remained relatively flat.
The surge in interest in cryptocurrencies in the fourth quarter of last year was fueled by the approval of the first spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission. These ETFs allow retail investors to access bitcoin as a share traded on a regulated exchange without direct exposure to the underlying asset.
This news sparked anticipation of increased interest from retail investors, driving heightened demand for cryptocurrencies. Coinbase noted that the quarter saw heightened volatility in crypto prices, similar to levels observed in the first quarter of 2023, driven by the approval of the bitcoin ETF and expectations for improving macroeconomic conditions in 2024.
Consumer trading revenue for the quarter was $493 million, up 79% quarter-over-quarter. Coinbase Chief Financial Officer, Alesia Haas, attributed this growth to the platform’s mix of fees for “Simple” and “Advanced” traders, noting that the company did not have to adjust fees to account for higher volumes.
“In Q4, a lot of the results of our fee rate is just the mix shift on our platform — who traded what product in the quarter,” Haas said. “So in Q4, when we saw higher volatility, we grew Simple trading, but Advanced grew more.”
(Source: CNBC | Investing.com | Investor’s Business Daily)
