On the 15th of February, Coinbase released its earnings report for the final quarter of 2023, indicating a promising outlook for the company in the upcoming year, primarily driven by Bitcoin trading.
Their technology expenses in 2023 decreased by $1 billion compared to 2022, while the company’s net income and earnings (EBITDA) are showing positive trends.
Up until 2021, various crypto assets competed for investor attention on the platform.
However, over the past two years, both retail and institutional trading volumes have dwindled, with Bitcoin and Ethereum emerging as the dominant favourites in the cryptocurrency realm.
Despite this, other cryptocurrencies still generate significant investor interest, contributing to nearly half of the company’s transaction revenues.
Stablecoins have also shown promising growth on the Coinbase platform, accounting for 22% of revenues in a year where subscriptions and services made up almost half of the company’s earnings.
Retail investor transactions, which previously constituted the majority of revenue, now make up less than half of net revenue, with subscriptions and services displaying strong growth trends to offset declines in transactions.
READ MORE: Ethena Labs’ High Yield Stablecoin Sparks Investor Concerns in Crypto Community
Custodial fees, earned through cash balances invested into cryptos, have seen a year-on-year decline, possibly indicating a waning interest in cryptocurrencies among investors due to conversion challenges to fiat currencies.
However, the significant trading volumes witnessed in recently launched Bitcoin ETFs suggest a positive outlook for cryptocurrencies as investments.
Despite not being accounted for in this earnings release, Coinbase’s custodianship of eight out of the 11 Bitcoin ETFs launched positions it for substantial growth as investor interest in these ETFs increases.
One challenge for Coinbase in the Bitcoin ETF market is the potential entry of other exchanges with their custodial platforms.
The company’s response to this challenge remains undisclosed, but significant announcements may be expected in the future.
Speculation around cryptocurrencies besides Bitcoin and Ethereum creates additional opportunities for Coinbase.
The launch of “International Markets” and the introduction of regulated derivatives through Coinbase Financial Markets (CFM) further expand the company’s offerings.
The Base platform, launched in August, operates as a layer-2 blockchain on Ethereum, facilitating efficient conversion between cryptocurrencies and fiat currencies for real-world use.
Coinbase’s vision, as outlined by CEO Brian Armstrong in 2016, includes enabling various financial services through apps, including investing, loans, and global remittances.
With Base ranking as the fourth-largest L2 player by total value locked on Ethereum, there’s significant potential for its utility, particularly in facilitating cheaper remittances through interconnected networks.
With its international market exposure and diverse offerings, Coinbase appears well-positioned to capitalise on various opportunities in the near future.
