Bitcoin
Coinbase Expands Revenue Streams as Crypto Trading Matures
Digital assets have had a significant year, with the market moving towards widespread adoption.
This change has resulted in a decrease in price volatility, which has been a key attraction for many investors, Bloomberg said. reported Thursday (May 30).
As a result, the largest crypto exchange in the US, Coin basehas suffered a decline in consumer turnover and a potential shift in its revenue sources, according to the report.
Volatility in the digital asset market has decreased significantly in recent times. According to the researcher CCDatathe average volatility of digital assets fell to 57% this year, compared to around 79% in 2021, the report states.
This decrease in volatility is seen as a sign of market maturation, as it attracts fewer speculative traders, according to the report.
Coinbase, like other exchanges, relies on trading fee revenue generated from cryptocurrency trading volume. However, declining volatility has resulted in lower trading volumes, impacting exchanges’ revenues, according to the report.
Coinbase’s consumer trading volume in the first quarter of this year was $56 billion, compared to a peak of $177 billion in the fourth quarter of 2021. Spot creation Bitcoin exchange-traded funds (ETFs) and the general maturation of the market contributed to this decline in trading volume.
To mitigate the impact of decreasing revenue from trading fees, exchanges like Coinbase have diversified their Revenue Sources, the report said. Coinbase generated about a third of its sales in the first quarter of this year from sources other than trading fees. These sources include revenue share from the USDC stablecoin and revenue from its Base blockchain.
The company also serves as the custodian of most U.S. spot Bitcoin ETFs and is listed as a custodian of spot ETFs Ether ETFs which are expected to be approved by regulators, according to the report.
Although Coinbase’s trading fee revenue is expected to be lower than its 2021 peak, the company’s overall outlook remains positive, according to the report.
Net profit is expected to increase 20 times this year compared to 2023. The sustainability of the current bull market and Coinbase’s ability to maintain spot market share will be crucial factors in determining its future revenues. Additionally, Coinbase’s diversification efforts and its role as an ETF custodian position the company for potential long-term revenue growth.
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