Coinbase (NASDAQ:COIN)'s spot trading volume in Q3 2023 experienced a significant drop of more than 50% from $158 billion in Q3 2022 to approximately $76 billion, marking the lowest level since its NASDAQ listing in April 2021, according to data from CCData. This downturn is particularly notable as trading fees, which are Coinbase's primary revenue source, accounted for 54% of its Q2 earnings.
InvestingPro's real-time metrics further illustrate this downturn with a reported revenue growth of -55.34% for LTM2023.Q2. The company's operating income, adjusted for LTM2023.Q2, was also in negative at -1870.44M USD, reflecting the challenging financial landscape for Coinbase.
The crypto sector has been grappling with a variety of challenges over the past year, including scandals, bankruptcies, and increased regulatory efforts. These factors have contributed to an 18-month contraction in the crypto market after the industry's boom year.
Coinbase, with a market cap of 17.42B USD according to InvestingPro, managed to increase its market share in Q3 despite these challenges. This gain is largely attributed to the regulatory troubles faced by Binance, one of Coinbase's main competitors. Binance has been under regulatory scrutiny, leading to a decrease in its spot market share for the seventh consecutive month. This situation has provided an opportunity for Coinbase and other competitors such as DigiFinex and Bybit to capture more market share.
While Bitmart and HTX (formerly Huobi) saw an increase in website traffic in 2023, Coinbase experienced a decrease. This contrasts sharply with 2020 when Coinbase recorded over $400 billion in volume and Bitcoin reached a record high of $64,000 in April 2021.
Coinbase is expected to announce a seventh consecutive quarterly loss on November 2, 2023. Predictions indicate that trading volume will fall short of a consensus estimate of $86 billion and revenue is expected to be 10% below forecasts. This aligns with InvestingPro Tips which suggest that the company has been in a declining trend in earnings per share and analysts do not anticipate the company will be profitable this year.
Data from CryptoQuant Quicktake on October 9, 2023, showed the Bitcoin Coinbase Premium Index, which measures the percentage difference between Bitcoin prices on Coinbase and Binance, declining towards the neutral zero level. This indicates a balanced buying and selling pressure among global and US investors.
For more insights and tips like these, readers can explore InvestingPro, which offers real-time metrics and professional advice on various companies including Coinbase. It currently lists six additional tips for Coinbase that could be valuable for investors.
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