A projected surge in revenue for the third quarter may not be enough to buoy Coinbase, as investor wariness lingers around the cryptocurrency exchange giant over retail trader wariness of the cryptospace.
The company, according to a Bloomberg report, is expected to see revenue double for the second consecutive quarter and return to profitability when it reports earnings after the market closes today. However, despite a 27% rise in share price so far this year, Coinbase shares’ performance is lagging behind that of Bitcoin, which rose more than 70% year-to-date.
Retail traders, once Coinbase’s bread and butter, flocked back to the platform earlier this year after BTC’s price reached a new all-time high above $73,000, but with Bitcoin trading sideways for months after hitting its peak, many have retreated.
Various metrics show decreased retail engagement. Mobile app usage data from market intelligence firm Sensor Tower quoted by Bloomberg shows a 6% year-over-year decline in monthly active users for Coinbase in the third quarter. Meanwhile, the world’s largest crypto exchange, Binance, saw a 20% increase in the same metric.
While downloads for Coinbase’s mobile apps rose a respectable 47% year-over-year, Binance saw a much steeper 94% jump. However, whereas weekly average time spent per user on Coinbase apps increased by 28% year-over-year, the same measure for Binance declined by 7%.
Coinbase’s market share in the spot market, where users buy and sell cryptocurrencies directly, also declined sequentially in the third quarter, falling from 4.51% to 4.18%. According to CCData, competitors like Crypto.com and Bybit are gaining ground, partly due to offering a wider range of digital tokens.
Despite these challenges, Coinbase is making strides in diversifying its revenue streams, with a significant portion of the company’s sales now coming from institutional trading and non-trading services, with roughly half of its revenue in the second quarter coming from non-transactional sources, according to a shareholder letter.
Featured image via Unsplash.
