What’s going on?

Coinbase’s sophomore set of earnings as a public company surpassed analysts’ expectations this week – but the crypto exchange says it’ll suffer as token prices stabilize.

What does this mean?

Coinbase saw its revenue surge more than tenfold last quarter compared to the same time last year, totalling an impressive $2 billion. And no wonder: crypto markets experienced some of their wildest swings in a while last quarter, with investors tripping over themselves to trade fast-moving digital currencies on Coinbase’s platform. So many investors, in fact, that the company’s monthly active users were up 44% on the quarter before, reaching nearly 9 million. But the fun can’t last forever: Coinbase warned that declining crypto price volatility this quarter has begun to cause a drop in user activity that’ll likely hit its future financials.

Why should I care?

The bigger picture: Try not to concentrate on it.
Coinbase’s $2 billion quarterly revenue is even more impressive when you consider that the nine-year-old crypto kid took in more cash than established marketplace operators like CME Group and Intercontinental Exchange. But size isn’t everything. A huge chunk of Coinbase’s revenue comes from trading in a single cryptocurrency: bitcoin. That makes its sales a lot riskier than traditional exchanges where revenue is more balanced across trading in many different assets.

Zooming out: The Sword of Satoshi.
Crypto markets face constant threats from new government regulation and malicious hacks – and this week brought examples of both. The US president’s proposed infrastructure bill, which is now through the Senate, promises to impose stricter tax reporting requirements on crypto brokers. Late on Tuesday, meanwhile, it emerged that cyberpunks had pulled off what could be decentralized finance’s biggest-ever heist. Around $600 million worth of cryptocurrency was stolen from users of the cross-blockchain Poly Network platform – but in a strange twist, the hackers promptly returned roughly half of their loot on Wednesday.

For information purposes only, not intended to constitute financial advice from us. The customer should assess the risk of  potential loss carefully and individually before investing in any financial products. Dabbl Group Limited is authorised by the FCA under the reference numbers 767263 as an appointed representative of its Principal firm VIBHS Financial Ltd, which is authorised and regulated by the Financial Conduct Authority under the reference number 613381.

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