Coinbase’s trading volume slumps by over half amidst wider crypto slowdown
America’s crypto exchange, Coinbase Global, experienced a striking decline in spot trading volume, revealing the waning interest of investors in the volatile cryptocurrency market.
Recent data indicates a 52% plunge in spot trading volume during Q3 2023, down by roughly $76 billion from a year earlier. In September, Coinbase’s monthly exchange volume declined to $20.42 billion, marking a 23% decrease from the $26.59 billion reported in August.
This downturn, as analyzed by CCData, marks the company’s lowest since its Nasdaq Stock Market listing in April 2021, coinciding with cryptocurrency valuations reaching their zenith.
This decline in trading volume, a crucial performance indicator for exchanges, comes as a blow to Coinbase. The company’s primary revenue source is its trading fees, with transaction revenue constituting 54% of its total earnings in the previous quarter. A series of unfortunate events, including scandals, bankruptcies, and heightened regulatory interventions, have contributed to this year-long downtrend in the cryptocurrency sector.
However, it’s worth noting that while Coinbase’s trading volume declined, the company gained market traction. As regulators increasingly placed crypto titan Binance under the microscope, Coinbase was among several exchanges capitalizing on Binance’s receding spot market share, which decreased for the seventh consecutive month. Other beneficiaries of Binance’s faltering performance include Bybit and DigiFinex.
Meanwhile, recent data shows that while industry leaders like Binance and Coinbase registered notable declines in web traffic, several others like OKX, HTX (formerly Huobi), Gate.io, CoinW, XT.com, and Bitmart recorded gains. Most notably, HTX experienced a 200% surge in web traffic, and Gate.io and CoinW saw increments of 143% and 66% year-to-date, respectively.
Coinbase is expected to report its seventh consecutive quarterly loss when it releases its results on November 2, as indicated by analysts surveyed by Bloomberg. The exchange’s trading volume is expected to be below a consensus estimate of $86 billion, and revenue is anticipated to be 10% below forecasts.
Mizuho Securities, which has an underperform rating on Coinbase, lowered its estimate for trading volume to $72 billion. Despite declining trading volumes, Coinbase likely gained market share in the quarter, with its percentage of overall spot trading volume rising to 5.7% compared to 4.2% a year earlier.