Coinbase profits plunge by 75% in Q3 as Bitcoin, Ethereum trading volume falters

  • Coinbase has reported a 75% decrease in net income in the third quarter of 2021.
  • This number represents a massive dip in profits compared to Q2, but a 500% increase compared to Q3 2020.
  • Coinbase CFO Alesia Haas stated that trading volume across the crypto spot market has declined significantly in the past quarter.

Leading cryptocurrency exchange Coinbase witnessed its total net revenue of $1.235 billion in Q3, resulting in a 75% drop compared to the previous quarter. The numbers in the third quarter fell 30% short of analyst estimates of $1.614 billion. However, the crypto firm stated that it had been a “strong quarter” for the firm. 

Crypto spot trading volume declined in Q3

The largest cryptocurrency exchange based in the United States by trading volume, Coinbase revealed in a report that its third-quarter earnings reached $406 million. This number represents a substantial drop from its record Q2 when the firm posted a net income of $1.6 billion. However, the Nasdaq-listed firm still saw a 500% increase over Q3 2020.

The cryptocurrency company posted revenue of $1.235 billion in the third quarter, falling substantially below analyst estimates, according to FactSet of $1.614 billion. 

According to Coinbase CFO Alesia Haas, trading volume across the entire cryptocurrency spot market has declined quarter-over-quarter in Q3. 

Comparatively, payments firm Square which allows Bitcoin trading revealed a 23% drop in Bitcoin revenue in the third quarter, highlighting that the leading cryptocurrency’s price remained stable during the period. Robinhood reported its crypto revenue nosedive 78%. 

Leading cryptocurrencies, Bitcoin and Ethereum no longer dominated the majority of trading volume or transaction revenue on Coinbase, as the digital asset firm has expanded to add new coins on the platform. BTC and ETH revenue dropped from 26% in Q2 each to 21% and 22% in Q3, respectively. 

Other altcoins accounted for 57% of the transaction revenue, and 59% of the trading volume. 

Haas added that the digital asset exchange will continue to support all legal assets, as the firm would not know precisely which coins customers are going to adopt in the future. 

However, Coinbase stated that this has been a “strong quarter” for the firm, as the company is gearing toward deeper investor engagement on the platform. The crypto exchange has been developing new products including its upcoming NFT marketplace.

The report encouraged Coinbase investors to steer the focus on the long term as opposed to quarter-to-quarter.