Coinbase Global (NASDAQ:COIN) witnessed a significant surge in its shares, nearing a two-year high, on Friday following the announcement of its first quarterly profit since 2021. The crypto exchange benefited from a substantial increase in trading volume in anticipation of the approval of spot bitcoin exchange-traded funds (ETFs).
The stock rallied by 14% to reach $189.28, contributing over $5 billion to the company’s market value. Coinbase experienced improved trading fees as investor interest in popular cryptocurrencies like bitcoin surged, particularly in the latter half of 2023, in anticipation of spot bitcoin ETF approvals.
Addressing concerns about ETFs potentially cannibalizing Coinbase’s fees, analysts at Canaccord Genuity stated that while there may be a shift in trading volumes due to the introduction of bitcoin ETFs, the overall impact is positive for Coinbase. The injection of ETFs into the market has driven higher spot prices and trading volumes, thereby bolstering Coinbase’s business momentum.
Despite the approval of ETFs last month, Coinbase has already generated transaction revenue of $320 million in the first quarter, as of February 13th, exceeding 60% of analysts’ expectations for the entire three-month period.
However, JPMorgan analysts cautioned that Coinbase could still face potential losses in trading volume. The brokerage highlighted the need for more comprehensive insight from management regarding the economics of arrangements with ETF issuers.
Coinbase serves as the custodian partner for eight out of the 11 approved ETFs. The company reported a profit of $1.04 per share for the fourth quarter, after recording a loss of $2.46 per share a year earlier.
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Author Faith Yakubu 
