The continued hallmarks of the cryptocurrency market are volatility and no shortage of strong opinions — positive and negative — over crypto’s place in commerce and financial services.
A number of cryptocurrency names — bitcoin and Ethereum among them — are trading at new highs or approaching new, record levels, which indicates that positive sentiment overshadows the negative (at least for now).
And in some quarters, the enthusiasm is evident in near- and longer-term price targets. In one example, J.P. Morgan said bitcoin should ultimately top $146,000.
The cryptocurrency exchange Coinbase is slated to report earnings after the market closes on Tuesday (Nov. 9). Whether crypto prices are soaring or plummeting, where volume is on the upswing, companies like Coinbase should benefit — at least in terms of top-line momentum. Consensus estimates peg revenue at $1.6 billion (leagues above last year’s third-quarter sales of $287 million), with earnings at $1.57 billion.
But beyond those two metrics, it will be important to keep an eye on trading volume. In the second quarter, it swelled to $462 billion, up nearly 38% sequentially and nearly 10 times higher than a year ago. The tally of monthly transacting users, up 44% year over year in the most recent report, to 8.8 million, will be closely watched — revenue-related transactions rely heavily on retail trading of cryptos, comprising roughly 95% of transaction revenue in the second quarter of this year.
Also read: Coinbase Monthly Transacting Users Surge 44%
The Most Popular Cryptos
The earnings will also provide a breakdown of which cryptos are the most popular, as Coinbase’s supplemental materials showed that bitcoin and Ethereum were more than half of trading volumes in its last report.
As to what some observers expect to see, in a note published last week, Hayden Capital said that Coinbase could log more than $49 billion in total revenue by 2025.
But regarding a “nearer-term horizon,” Coinbase’s recent commentary about the volatility related to crypto — along with volumes — may have set relatively low expectations for those metrics. Back in August, management noted that after June’s quarter-end, with an initial look into August’s activity, trading volumes “slightly improved compared to July levels, but remain lower than earlier in the year. As a result, we believe retail MTUs and total trading volume will be lower in Q3 as compared to Q2.”
The heavy reliance on trading spotlights continued efforts by Coinbase to cross-pollinate users’ activities. Management has said that 27% of its monthly transacting users were using multiple products across its platform, including Coinbase Card (a debit card) and Coinbase Borrow (which lets users borrow money using bitcoin as collateral).
Those latter two offerings illustrate efforts to bring cryptocurrencies more into the mainstream — and specifically into commerce. Joint research from PYMNTS and BitPay has found that 18% of the adult population is likely to use cryptocurrency to make a purchase — some 46 million consumers, including 17 million who don’t currently own cryptos.
Get the study: BitPay Study: How Consumers Want to Use Crypto to Shop and Pay in 2021 and After
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