Coinbase Global, a premier cryptocurrency exchange platform, has reported a strategic shift in its operations, leading to a prediction of a rare flip in its revenue structure in the upcoming Q2 2023 report. For the first time, it is anticipated that Coinbase’s non-trading revenue may surpass its trading revenue, which is an intriguing development. This projection comes from Messari’s analysis of publicly available blockchain data.
For the first time in its history, Coinbase's non-trading revenue may exceed its trading revenue.
— Kunal Goel (@kunalgoel) August 2, 2023
With the power of publicly available blockchain data, we can reasonably estimate what @coinbase Q2 2023 may look like BEFORE they announce it.
🧵 pic.twitter.com/sgJU54niZp
Coinbase has seen its spot trading volumes dip by 36% during the quarter, a strategic maneuver aimed at bolstering margins rather than simply chasing market share. However, the retail volumes, the lifeline of Coinbase’s trading revenue, are believed to have experienced a less steep drop, estimated at around 14%.
A key driver of Coinbase’s non-trading revenue is alleged to be the interest income, primarily from stablecoin USDC. Nevertheless, Q2 has witnessed a notable outflow from USDC following its debugging in March 2023. Consequently, despite elevated interest rates boosting yield on USDC deposits, a 19% slump in interest income is anticipated.
The much-awaited Q2 earnings announcement of Coinbase Global is due on Thursday, August 3rd, after the market closure. Seeking Alpha, a behemoth, reports that the estimated EPS stands at -$0.62, indicating a 29.10% year-over-year (Y/Y) growth, while the consensus revenue estimate is $638.79M, reflecting a 21.0% Y/Y decline. Historically, Coinbase has outperformed EPS estimates 63% of the time and revenue estimates 50% over the last two years.
Brian Armstrong, CEO of Coinbase, has recently stirred discussions in the crypto community by suggesting that the company might add the Bitcoin Lighting network. The move is part of Armstrong’s vision to enhance the worldwide adoption of crypto payments.
The next step for crypto is to make payments instant and free globally.
— Brian Armstrong 🛡️ (@brian_armstrong) July 26, 2023
This will take lots of work from all of us, Coinbase included, getting layer 2's integrated, better on-ramps, simpler UX/onboarding, etc.
A magic threshold would be getting the average payment under 1 cent… https://t.co/IDWTHsZNUq
Despite skepticism from Bitcoin stalwarts like MicroStrategy’s Michael Saylor and Square’s Jack Dorsey, Armstrong maintains that incorporating layer 2’s, improving on-ramps, and refining UX/onboarding are critical for revolutionizing the global payments infrastructure. All eyes are now set on Coinbase’s Q2 announcement as the projected shift in its revenue structure promises to bring new dynamics into play in the ever-evolving cryptocurrency landscape.
