Coinbase Spot Trading Volume Plummets in Q3 2023
During the third quarter of 2023, American-based crypto exchange Coinbase experienced a significant drop in spot trading volume, according to reports. The platform’s spot trading volume fell by over half compared to the previous year. Data from CCData revealed that Coinbase recorded about $76 billion in spot trading volume in Q3 2023, representing a 52% decline from the same period in the previous year. This is likely the lowest spot trading volume the platform has seen since before its public listing on the Nasdaq Stock Market in April 2021.
Impact on Coinbase’s Revenue
The sharp decline in spot trading volume is a blow to Coinbase as it derives a significant portion of its revenue from trading fees. In the second quarter, transaction revenue accounted for 54% of its total earnings. However, this figure was as high as 88% in previous years and quarters. Despite this decline, Coinbase seemed to have gained market traction during the quarter, potentially benefiting from Binance’s regulatory troubles. Coinbase’s percentage of overall spot trading volume increased by 5.7% compared to the previous year.
Projected Quarterly Loss and Lower Trading Volume
Coinbase is expected to post its seventh consecutive quarterly loss when it releases its quarterly report on November 2, 2023. Additionally, the trading volume is predicted to be below consensus estimates of $86 billion, with revenue expected to be 10% lower than forecasts.
Tough Year for Crypto Sector
The decline in crypto interest can be attributed to various factors such as scandals, bankruptcies, and regulatory efforts. These events have made it a challenging year for the crypto sector overall.
Coinbase Premium Index Declines
On October 9, 2023, data from CryptoQuant Quicktake revealed that the Bitcoin Coinbase Premium Index has declined towards neutral values. The index represents the percentage difference between Bitcoin prices on Coinbase and Binance. This decline indicates a balance between global and US-based investors’ buying and selling pressure.
Hot Take: Coinbase Faces Declining Spot Trading Volume and Challenging Market Conditions
Amidst a decline in crypto interest, Coinbase, one of the world’s largest crypto exchanges, experienced a significant drop in spot trading volume during Q3 2023. This decline is a blow to Coinbase as it heavily relies on trading fees for revenue. Despite the challenges, the exchange gained market traction amid regulatory issues faced by competitor Binance. However, Coinbase is expected to report its seventh consecutive quarterly loss and lower-than-expected trading volume. The overall decline in crypto interest can be attributed to scandals, bankruptcies, and regulatory efforts. These factors have made it a tough year for the crypto sector as a whole.
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