The Growing Bitcoin Reserve of Coinbase: Boosted by ETFs
Coinbase, the leading US crypto exchange, is on the verge of reaching a major milestone with 1 million Bitcoin in reserve. This achievement is expected to happen soon, largely due to the influence of ETFs.
However, this figure doesn’t only include the BTC held by the exchange’s customers in their wallets but also encompasses all the Bitcoin held for all customers, including those in the Custody section. Coinbase Custody serves as the primary custodian for American ETFs on spot Bitcoin.
The Quantity of Bitcoins Held by Coinbase: Growing Reserve Thanks to ETFs
According to data collected and published by Arkham Intelligence, Coinbase Global currently holds over 995,000 BTC in its custody on its wallets. This amounts to a value of nearly $42 billion, more than double the $16 billion worth of ETH held by Coinbase. Interestingly, Coinbase’s partner company Circle holds less than $600 million in USDC, making Chainlink’s LINK with over $1.1 billion the third most held token.
It’s important to note the distinction between Coinbase Global and Coinbase Prime. The latter is an exchange dedicated to large institutional clients, including ETFs. Coinbase Prime holds significantly fewer BTC, just over 1,500. As it receives Bitcoin from the Grayscale ETF for liquidation, it’s evident that these have already been sold.
In the past two weeks alone, GBTC has sent over 100,000 BTC to Coinbase Prime. However, Coinbase Prime currently only has 1,500 BTC in its treasury. Since Coinbase Prime also provides custody services to its large clients and holds very few BTC in cash, it implies that its clients mainly use this institutional-level platform for buying or selling Bitcoin rather than for custody purposes.
Comparing with Other Exchanges
According to Arkham Intelligence, the international version of Binance, the largest crypto exchange in terms of trading volumes, holds “only” 664,000 BTC. Surprisingly, in dollars, it holds more BNB than BTC: $50 billion versus $28 billion. Consequently, Coinbase Global is currently the largest holder of Bitcoin among exchanges, thanks to its custody service.
As far as we know, there is only one other individual who holds more Bitcoin: Satoshi Nakamoto. However, Nakamoto disappeared in 2011 and acquired his 1.1 million BTC through mining. Moreover, he has never used them. On the other hand, Coinbase is still operational and has acquired its BTC through deposits from its customers.
For reference, Grayscale’s ETF holds about 500,000 BTC, which is a little over half. MicroStrategy holds almost 190,000 BTC, while Block.one holds 164,000 BTC. The US Department of Justice reportedly holds over 200,000 BTC due to various seizures over the years. China is also believed to hold around 190,000 BTC for similar reasons. Additionally, there are approximately 157,000 BTC held on bridges like WBTC and 140,000 BTC still held by the failed Japanese exchange Mt.Gox since 2014.
The Role of ETFs
The world’s largest spot Bitcoin ETF, Grayscale Bitcoin Trust (GBTC), stores its BTC on Coinbase Custody wallets. During the past two weeks, GBTC has been liquidating many of its holdings, resulting in a decrease in GBTC Bitcoins. Another ETF called IBIT from BlackRock also uses Coinbase Custody as its custodian and has acquired almost 50,000 BTC in two weeks.
ARKB, an ETF by ARK Invest, has also chosen Coinbase Custody as its custodian. In the same period, it has acquired more than 13,000 BTC. The selection of Coinbase Custody as the custodian for numerous American ETFs has led to an increase in the amount of Bitcoin held in custody at Coinbase, despite the significant liquidations of GBTC.
Coinbase and the New Record of Bitcoin in Reserve: Aiding Bitcoin ETFs
Coinbase is not only a major crypto exchange but also a publicly traded company on Nasdaq. Its stock prices have experienced fluctuations, with a decrease since December 29th. However, prior to that, the prices had risen significantly from around $70 at the end of October to $187 on December 28th. Despite the recent drop to $121, the current price is still 70% higher than that of late October.
Currently, Coinbase is facing ongoing disputes with the SEC. Nonetheless, many analysts believe that the SEC is likely to lose these battles. With its position as the leading American crypto exchange and the largest custodian of Bitcoin in the world (considering Satoshi Nakamoto’s absence), Coinbase continues to play a vital role in the crypto industry.
Hot Take: Coinbase Nears 1 Million BTC Milestone
With its growing reserve of Bitcoin approaching 1 million BTC, Coinbase solidifies its position as a prominent player in the cryptocurrency market. The influence of ETFs has played a significant role in this achievement. As Coinbase Custody serves as the primary custodian for American ETFs on spot Bitcoin, it has experienced an increase in Bitcoin holdings despite liquidations from Grayscale Bitcoin Trust (GBTC). While Coinbase faces ongoing disputes with regulatory bodies like the SEC, it remains operational and influential within the industry. As Coinbase approaches this significant milestone, it continues to shape the future of cryptocurrencies.
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