Crypto trading platform could struggle to hold on to its rich valuation this year
https://www.ft.com/content/2cd45d4b-c1ae-4f30-b9af-88f0bcca21f5
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Coinbase was the financial dark horse of 2023. The crypto trading platform’s near 400 per cent surge in stock price trounced tech peers, exceeding even Nvidia’s 249 per cent gain.
Much of that rise can be attributed to excitement about positive regulatory action. Speculation is rife that the US Securities and Exchange Commission will soon approve exchange traded funds that invest in bitcoin directly. Coinbase stands to benefit by acting as custodian of bitcoins held by ETF funds.
Bitcoin cheerleaders hope that such vehicles will broaden the investor base and fuel a price rise. Bitcoin prices rose 160 per cent in 2023. This week they climbed above $45,000 for the first time since April 2022.
Yet even as investors pile into Coinbase shares and bitcoin prices rise, trading activity on the platform remains relatively subdued. The number of monthly transacting users stood at just 6.7mn at the end of the third quarter, down from 8.5mn a year ago. Trading volume slid by more than 50 per cent over the period, while total transaction revenue was a fifth lower.
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Much of that rise can be attributed to excitement about positive regulatory action. Speculation is rife that the US Securities and Exchange Commission will soon approve exchange traded funds that invest in bitcoin directly. Coinbase stands to benefit by acting as custodian of bitcoins held by ETF funds.
Bitcoin cheerleaders hope that such vehicles will broaden the investor base and fuel a price rise. Bitcoin prices rose 160 per cent in 2023. This week they climbed above $45,000 for the first time since April 2022.
Yet even as investors pile into Coinbase shares and bitcoin prices rise, trading activity on the platform remains relatively subdued. The number of monthly transacting users stood at just 6.7mn at the end of the third quarter, down from 8.5mn a year ago. Trading volume slid by more than 50 per cent over the period, while total transaction revenue was a fifth lower.
(...)