Bitcoin, Ethereum accounts for so much of Coinbase’s assets: Decoding financial results

Coinbase Global, the largest US cryptocurrency exchange company that helps one to buy and “hold” cryptocurrencies such as Bitcoin, Ethereum, Litecoin among others was listed in April 2021 at a price of around $ 380. Today, Coinbase (Coin) is trading at around $ 57.40

TradingPlatforms has studied Coinbase’s financial results for 2022, and highlighted the share of cryptocurrencies that make up the assets. It concludes that 42% of the cryptocurrency exchange’s assets are in Bitcoin (BTC). This is a small increase from Q4 2021, when 40% of the assets were in crypto. Similarly, Ethereum accounts for 24% of the company’s assets, while other cryptocurrencies account for 31%.

TradingPlatforms’ chief financial officer Edith Reads has shared her thoughts on the data. She confirms that Coinbase has always held Bitcoin and other cryptocurrencies since its inception. It has driven it by its firm belief in BTCs and the long-term potential of the crypto-economy. “

Coinbase’s total assets amounted to $ 256 billion during the period. This figure was a decrease of 22 billion dollars from a total of 278 billion dollars in the fourth quarter of 2021. The company attributes this fall to a fall in the prices of cryptocurrencies. That said, net inflows of billions of dollars have dampened it from major losses.
As the overall market value of cryptocurrencies fell in Q4, Coinbase saw a corresponding decline in market share. But the decline was more pronounced for assets highly represented on the platform, such as ETH and SOL. As a result, Coinbase believes that this reflects market conditions and is not a sign of weakness.

The cryptocurrency exchange’s transaction revenues also hit Q1, falling 56% compared to Q4. However, even though transaction revenues fell, they still accounted for most of Coinbase’s quarterly net revenues. It brought in a total of $ 1.2 billion, of which $ 1.0 billion was revenue from transactions and $ 152 million from subscriptions and services.

In addition, transaction revenues from retail trade (USD 966 million) fell by 56% from Q42021. Despite this, there was an improvement in the average sales tax rate, thanks to increased consumer activity on the platform.

Again, transactional revenue from institutional investors was $ 47 million in Q1, down 48% from Q4. The main driver of this decline was a change in the fee structure for market makers, which accounted for the vast majority of Coinbase’s institutional volume.

Despite declining transaction revenues, Coinbase continues to see growth in its user base and merchant adoption. This indicates that there is still great demand for cryptocurrency payments and that Coinbase is well positioned to capitalize on this demand.

The new fee structure caused a significant decline in Coinbase’s institutional fee rate. But the company continued to see strong demand from market players. In addition, it registered a slight improvement in its retail activity. This increase helped to offset some of the losses in institutional volume.