The Surprising Potential of Coinbase’s Non-Trading Revenues
While the trading volumes at Coinbase Global Inc. (COIN) have decelerated significantly, causing some concern among investors, a recent analysis by Rosenblatt Securities suggests that the company’s non-trading revenue streams may be underestimated.
A Closer Look at Coinbase’s Non-Trading Revenues
Coinbase’s non-trading revenue comes primarily from its transaction fees for sending and receiving digital assets, as well as its institutional services and merchant services. According to Rosenblatt Securities, these non-trading revenue streams could potentially make up a larger portion of the company’s overall revenue than currently anticipated.
Institutional Services and Merchant Services
Coinbase’s institutional services, which cater to large investors and businesses, have been growing rapidly. In the second quarter of 2021, institutional trading accounted for over 60% of Coinbase’s total trading volume. This trend is expected to continue, as more institutional investors enter the cryptocurrency market.
Transaction Fees
Transaction fees are another significant source of non-trading revenue for Coinbase. These fees are charged to users who send or receive digital assets on the platform. While the overall trading volume may have decelerated, the number of active users on Coinbase continues to grow, which could lead to increased transaction fees.
Impact on Individual Investors
For individual investors, the potential growth of Coinbase’s non-trading revenue streams could be a positive sign. It suggests that the company is diversifying its revenue sources and is well-positioned to weather any volatility in the cryptocurrency market.
Impact on the World
On a larger scale, the potential growth of Coinbase’s non-trading revenue streams could have a significant impact on the world. As more institutional investors enter the cryptocurrency market, the mainstream acceptance of digital assets is likely to increase. This could lead to greater adoption of cryptocurrencies for transactions and investments, as well as the development of new use cases.
Conclusion
While the deceleration of Coinbase’s trading volumes may have caused some concern among investors, the potential growth of the company’s non-trading revenue streams should not be overlooked. With its institutional services and merchant services seeing significant growth, as well as the continued growth of transaction fees, Coinbase is well-positioned to weather any volatility in the cryptocurrency market and contribute to the mainstream adoption of digital assets.
- Coinbase’s non-trading revenue streams, including transaction fees, institutional services, and merchant services, could make up a larger portion of the company’s overall revenue than currently anticipated.
- Institutional services, which cater to large investors and businesses, have been growing rapidly and accounted for over 60% of Coinbase’s total trading volume in Q2 2021.
- Transaction fees are another significant source of non-trading revenue for Coinbase and are likely to increase as the number of active users on the platform grows.
- The potential growth of Coinbase’s non-trading revenue streams could be a positive sign for individual investors and could contribute to the mainstream adoption of digital assets.
