Crypto Trading Volatility Hits Coinbase Q3 Profits
The news: Like us predicted in our analysis of Robinhood Third Quarter Profits, Third Quarter Crypto Exchange Revenue Plummeted Following two record quarters.
In numbers : Net income reached $ 1.24 billion, well 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, against 8.8 million in the second quarter.
- Users have also become less involved with the products of the exchange without investment: the income of To win, which allows users to earn crypto by watching educational content, totaled $ 15.2 million, compared to $ 16.9 million in the second quarter.
The big takeaway: The second quarter saw the crypto frenzy reach its peak, exemplified by the Dogecoin hype. In T3, world trade volume fell by 37%, causing Coinbase to drop.
- Note, Coinbase’s transaction volumes decreased by 29%, while Robinhood’s crypto transaction volumes fell 78% quarter after quarter. This underscores 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: global crypto market has hit $ 3 trillion for the first time last week.
Looking forward: 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 solutions and NFTs.
- We have already discussed the key role fintechs will play in facilitating transactions within the metaverse. Already, players like Square and Robin Hood are launching the crypto wallets that 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 wallet from laptops and desktops, making it easy to access decentralized solutions. Coinbase is also planning to launch a TVN 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.