Coinbase Quarterly Revenue May Drop Due to Weak Market Volatility

Key Points:

• Reduced token price volatility translates to reduced trading volume and market share for Coinbase.
• Analysts expect lower Coinbase quarterly revenues in Q3, as there are seasonal slowdowns in trading, but changes in regulations may bring some reprieve.

Coinbase is set to report second-quarter results Thursday, facing challenges that could arise despite initial expectations for revenue nearly to double and profits to rise, according to Bloomberg.

Read more: Coinbase Tokenized Fund Is Being Planned For RWA’s New Boom

Coinbase Quarterly Revenue Faces Decline Amid Lower Market Volatility

Analysts explained that a slide in Coinbase quarterly revenue and trading volume might occur as the market’s volatility has fallen, something the largest U.S. cryptocurrency exchange has been battling since it went public in April 2021.

This is because token price volatility, which is a key determinant of trading volume for Coinbase, has crashed. Indeed, this year, the 30-day average volatility of digital assets stood at 52%, from 79% in the prior bull market. This has seen spot trading volumes slump almost 30% in the second quarter, according to CCData.

The fall in Coinbase’s market share was further added to by increased competition from international exchanges, like Bybit, which made more listings in the recent market rally. Acquisition of crypto exchange Bitstamp by Robinhood; enhanced competition in European and institutional markets.

Despite Coinbase’s 30% share price surge since the beginning of the year, this rally still lags behind the world’s largest cryptocurrency, which climbed about 50%. Last year’s huge surge in the share price came in succession to a steep fall in 2022, brought about by scandals and bankruptcies in the crypto world.

Weaker Q3 Outlook Expected Despite Regulatory Optimism

For the second quarter, analysts are looking for Coinbase quarterly revenue of $1.39 billion, up sharply from one year ago, as well as earnings of 84 cents a share. The results, however, could be affected since the company will adopt changes in accounting rules that marked-to-market digital assets and may affect profitability.

Looking ahead, the third quarter is bound to further decline based on the Coinbase quarterly revenue tradition of summer trading downturns. Estimates have been lowered by analysts in view of lackluster retail activity and a cautious stance on cryptocurrency prices.

More importantly, some investors still have hopes that there might be a crypto-friendly turn in regulations in case former President Donald Trump comes into power again.