Q1 ebook

Smaller Investors Creep Back Toward Crypto

Everyday investors are returning to cryptocurrency, though with less enthusiasm than before.

That’s according to a Sunday (Feb. 18) report by Bloomberg News, which notes that the largest American crypto exchange, Coinbase, saw a 60% year-over-year jump in consumer transaction revenue during its most recent quarter, and a 80% increase from quarter to quarter.

Meanwhile, the report said, Robinhood, which is focused on retail users, saw crypto notional volumes jump by 242% in December from a year ago.

The report argues these are the latest indicators that “mom-and-pop” crypto enthusiasts, who lost billions when the market plummeted in 2022, could be returning to the space in the wake of last month’s launch of U.S. exchange-traded funds investing directly in Bitcoin. 

Bitcoin’s price has more than doubled in the last year, and the thought of it climbing even higher may be making consumers forget how volatile crypto can be, the report said.

“There are signs that the retail audience is starting to get back into the market, but not nearly to the extent of the last bull market yet,” Kyle Doane, a trader at Arca, told Bloomberg. “Even crypto stocks like COIN and miners are exhibiting more volatility than many tokens.”

As PYMNTS wrote last week, Coinbase’s 2023 fiscal year numbers — when put up against its fourth quarter financial results — underscored the difference a year can make in the crypto landscape: The company’s 2023 transaction revenue was $1.5 billion, down 36% year over year, and total trading volume was $468 billion, down 44% from the previous year. 

Consumer trading volume for the full year 2023 was $75 billion, down 55% YoY, and institutional trading volume was $393 billion, down 41% YoY. The key driver of these declines was “multi-year lows in crypto asset volatility,” executives told investors. 

However, “the exchange’s Q4 numbers told a more positive story about the crypto ecosystem,” that report said.

Coinbase’s Q4 consumer transaction revenue came to $493 million, a 79% increase quarter over quarter, while the exchange’s Q4 consumer trading volume was $29 billion, up 164% from the previous. That’s notably better than the U.S. spot market, which rose 90% over the same period, executives noted.

“Most customers on our platform own multiple crypto assets, not just bitcoin,” Coinbase CFO Alesia Haas told investors.