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Coinbase revenue jumped as crypto assets soared
Coinbase – the leading U.S. crypto currency exchange, announced on the 15 th of February its first profit since 2021. The robust result was supported by strong trading volumes due to a renewed interest in crypto assets. In the fourth quarter of 2023 the company reported a profit of $273.4 million, or $1.04 per share, in a stark contrast to the loss of $557 million, or $2.46 per share recorded the prior year.
This turnaround could be attributed to a surge in trading volume driven by investors’ optimism surrounding spot Bitcoin exchange-traded funds (ETFs), which lifted Bitcoin and other token prices significantly higher. Following the release of the Q4 2023 earnings results Coinbase share price experienced an impressive increase of 69%, reflecting the positive perception from investors.
During the last quarter of 2023, Coinbase have reported a rise in trading activity and investor flow. The latest Coinbase results point to strong earnings growth, which is in line with the recent rally across most crypto assets.
Market catalysts
Crypto prices have been rising for much of 2023, but the rally ramped up momentum in the last quarter of 2023 as high hopes for bitcoin ETFs sparked strong interest in digital assets. The main catalysts driving crypto prices higher have been: the approval of spot Bitcoin ETFs, the upcoming Bitcoin halving in mid-April, the imminent update of Ethereum known as Dencun, and the prospects of approval for spot ETFs on Ethereum in the United States, which is estimated to have a 50% chance of approval in May.
Enthusiasm for crypto has spiked over the past six months as investors anticipated approval of the first spot Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC). The Bitcoin ETFs were approved in mid-January; however, the expectations of a favourable decision by the SEC triggered more than 70% rally in Bitcoin prices in the last three months of 2023. This resulted in a strong rise in Q4 transaction revenue for Coinbase.
Q1 2024 guidance
The crypto exchange expects a strong first quarter, estimating its subscription and services revenue to be between $410 million and $480 million. The company’s focus in 2024 is on improving its adjusted EBITDA in absolute dollars term.
At the moment there is lack of clarity from Coinbase regarding the exact financial impact of BitcoinETFs. While the spot Bitcoin ETFs are beneficial for Coinbase the lack of transparency makes unclear the real earnings potential.
The ETFs are certainly beneficial for Coinbase as the crypto exchange provides custodial services to 8 out of the 10 spot bitcoin ETFs. While custody is a relatively small part of the business the ETFs are rejuvenating the whole crypto space, positively impacting Coinbase trading volumes.
Source: TradingView
Technical analysis
Coinbase share price has bottomed in January 2023 at $31.55 and has rallied to $279.71 on Monday, posting 800% increase in fifteen months. The bottom in Coinbase shares matches closely the bottom of Bitcoin, which have risen 330% over the same period of time. The chart above makes it quite clear that the surge in Bitcoin significantly affects Coinbase share price.
Bitcoin has rallied 60% from the beginning of 2024 lifting the value of other coins. This increases transaction volumes for Coinbase, which generates large portion of its revenue from transaction fees. The improved crypto market conditions and the product suite expansion has been a tail wind for Coinbase shares. Therefore, for as long as crypto prices continue to rise, we can reasonably expect Coinbase share price to move in tandem.
While at this juncture in time Coinbase shares are overbought on a short-term basis, the overall primary up trend remains constructive, and we envisage higher price levels in the year ahead. The Relative Strength Index (RSI) indicator remains firmly in the bull market range and see levels in the range between $350 – $370 as easily achievable.
Conclusion
Despite regulatory challenges, Coinbase experienced a remarkable resurgence, buoyed by surge in crypto prices and SEC-approved spot Bitcoin ETFs. Although the road ahead for Coinbase remains uncertain, as long as the momentum in crypto assets continues, Coinbase share price is likely to be supported.
Professional investors looking for magnified exposure to Coinbase may consider Leverage Shares +3x Long Coinbase or Leverage Shares -3x Short Coinbase ETPs.
Footnotes:Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.
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The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
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Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
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Notice
If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.
If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.
Risk Warnings
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
United States Visitors
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Exclusion of Liability
Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
Leverage Investment
Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.
Cookies
Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.
This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.
By clicking you agree to the Terms and Conditions displayed.
