Coinbase Global Inc. COIN has experienced a significant surge in customer adoption and trading activity across its platforms, driven by the launch of several Bitcoin BTC/USD spot ETFs in the U.S. during the first quarter of 2024.
What Happened: Coinbase’s co-founder and CEO Brian Armstrong attributed the record growth to the excitement around Bitcoin ETFs. This led to all-time highs in trading volume and active clients, particularly in the institutional business.
“The excitement around Bitcoin ETFs drove new customer adoption across our product suite,” said Armstrong. “We saw all-time highs in trading volume and active clients, for instance, in our institutional business.”
The company’s institutional prime brokerage business, Coinbase Prime, also saw record levels of trading volume and active clients in the first quarter, driven by the Bitcoin ETF rollouts.
This resulted in a significant increase in other transaction revenue, previously included in consumer transaction revenue, primarily due to higher Base sequencer fees and payment-related revenue, as indicated by Coinbase CFO Alesia Haas.
During the quarter, 40% of Coinbase’s institutional clients engaged with three or more Coinbase Prime products, such as custody, trading, staking, and financing.
This, according to Coinbase’s President and COO Emilie Choi, directly impacted the company’s financials, leading to a 69% quarter-over-quarter growth in assets under custody to $171 billion and a 64% growth in custodial fee revenue to $32 million.
The approval of spot Bitcoin ETFs in early 2024 marked a significant milestone in the cryptocurrency industry. It reshaped market dynamics and contributed to Bitcoin’s surge to a new record high. The launch of ETFs like ARK 21Shares Bitcoin ETF ARKB, Fidelity Wise Origin Bitcoin Fund FBTC, and VanEck Bitcoin Trust HODL saw substantial trading volumes.
ARK 21Shares recorded a volume of 1,717,102 shares, Fidelity Wise Origin Bitcoin Fund saw a volume of 23,013,692 shares, and VanEck Bitcoin Trust had a volume of 106,685 shares.
Why It Matters: The surge in Coinbase’s Q1 performance is in line with the company’s revenue beat and institutional trading volume hitting an all-time high. The company reported total revenue of $1.64 billion, surpassing a Street consensus estimate of $1.34 billion and a GAAP EPS of $4.40.
Before the earnings report, Coinbase’s stock had surged over 300% in the past year, riding the crypto boom. The stock’s surge compared favorably to Bitcoin’s price, which rose by 103.13% over the past year. This performance indicates the company’s strong position in the market.
Additionally, Coinbase’s decision to roll out support for the Lightning Network in collaboration with Lightspark, the largest U.S. crypto exchange by trading volume, has also contributed to the company’s growth. The Lightning Network offers a faster and cheaper way for users to send, receive, or pay with Bitcoin directly from their account, addressing scalability issues and enhancing the overall user experience.
Price Action: On Thursday’s close, Coinbase Global Inc. traded at $223.70 in after-hours trading, marking a 2.25% decrease from the previous close, according to the data from Benzinga Pro.
Image Via Shutterstock
This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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