Crypto Trading Volatility Hits Coinbase Q3 Profits

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The news: As we predicted in our analysis of Robinhood’s third-quarter earnings, third-quarter crypto revenue fell after two record quarters.

By the Numbers: Net revenue reached $ 1.24 billion, ahead of $ 287 million in the third quarter of 2020, but below its peak of $ 2.23 billion in the last quarter.

Monthly active users also fell to 7.4 million, from 8.8 million in the second quarter. Users have also become less involved with exchange products without investment: Earn’s income, which allows users to earn crypto by watching educational content, totaled $ 15.2 million, compared with $ 16.9 million. dollars in the second quarter.

The big takeaway: The second quarter saw the crypto frenzy reach its peak, exemplified by the Dogecoin hype. In the third quarter, global trade volume fell 37%, causing Coinbase to drop.

It should be noted that Coinbase’s trading volumes fell 29%, while Robinhood’s cryptocurrency trading volumes fell 78% quarter over quarter. This underlines Coinbase’s position as one of the most popular exchanges for crypto trading, regardless of the mood in the market. We expect both fintechs to experience another spike in Q4, similar to Q2, as crypto prices rebounded: the global crypto market hit the $ 3 trillion mark for the first time last week.

Looking Ahead: Coinbase is trying to mitigate the impact of crypto trading volatility on its income – it plans to expand the use of its crypto wallet beyond trading in decentralized applications (Dapps), DeFi and NFT solutions.

We have already discussed the key role fintechs will play in facilitating transactions within the metaverse. Already, players like Square and Robinhood are launching the crypto wallets they will need to play this role. Currently, users mainly trade cryptos with Coinbase’s crypto wallets. But last week, the company added a downloadable browser extension that allows users to connect to their Coinbase wallets from laptops and desktops, making it easier to access decentralized solutions. Coinbase also plans to launch an NFT market later this year. Collectively, these announcements highlight its plans to position itself not just as a crypto exchange, but as a gateway for users to access services in the next iteration of the internet.

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