Coinbase Shares Rally as Bitcoin ETF Momentum Aids Its Recovery

Coinbase Global shares COIN.O'svalue increased by 12% before the end of the trading session today.

Coinbase announced its first profit in stocks since 2021 on February 15. The report showed a profit of $1.04 per share in the fourth quarter of 2023 compared to a loss of $2.46 per share recorded the previous year.

According to the report, this profit was caused by a spike in trading volume due to investors' optimism for spot Bitcoin exchange-traded funds (ETFs).

Notably, after the announcement, Coinbase share price increased, triggered by the positive response from investors.

Coinbase Global Records Bitcoin ETF-Inspired Gains

The Coinbase stock, COIN.O, gained 12% today, trading at $186.06. Based on this movement, the shares are on course to attain the highest price level this year. If this price level is maintained, Coinbase can gain nearly $5 billion.

Coinbase shares surge after bitcoin ETF euphoria helps return to profitability https://t.co/5ZjVOPtpaA pic.twitter.com/L8zSXmrw3G

- Reuters (@Reuters) February 16, 2024

According to the company's letter to shareholders, increased crypto asset volatility in Quarter 4 of 2023 was crucial to the current bullish state of the market.

The anticipation of a spot Bitcoin ETF approval helped BTC rally up to 57% in the fourth quarter of 2023, which helped boost Coinbase's trading fees.

In addition, the company dispelled fears about the ETFs affecting its fees despite concerns from analysts that users may prefer ETFs.

However, other analysts believe introducing Bitcoin ETFs will encourage higher spot prices. According to analysts at Canaccord Genuity, theincreased trading volume will boost Coinbase's revenue.

Notably, after the approval of the ETFs in January, Coinbase generated a transaction revenue of $320 million as of February 13, which is a decent return for the company.

According to equity research analyst Michael Elliot, Coinbase might not be able to maintain its high rates as competition increases.

Coinbase Impressive Returns in Q4, 2023

Coinbase reported a net profit of $905 million in the fourth quarter of 2023, an increase of nearly 50% from $605 million the previous year (2022).

Remarkably, cryptocurrencies recorded high interest from investors in the fourth quarter of 2023 due to the anticipation of a Bitcoin ETF approval in 2024.

According to Coinbase, transaction revenues were the primary increase channel in the last quarter of 2023. The consumer trading revenue recorded in the previous quarter was $493 million, a 79% increase from its value in the same period in 2022.

Further, Coinbase made projections for Q1, 2024, assuring shareholders that subscription and services revenue will rake in between $410 million and $480 million. However, transaction revenue will likely surpass the others based on the early returns in 2024.

Regarding the fee increase, Coinbase Chief Financial Officer Alesia Haas stated in an interview with CNBC on Thursday that there wasn't a need to adjust fees to achieve higher trading volumes. Instead, the fee structure varied for simple and advanced traders.

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