Bitcoin ETFs May Hurt Coinbase’s Bottom Line In 2024: Analyst
Analysts warn that Coinbase’s medium-to-long-term performance could suffer as newly launched Bitcoin spot ETFs challenge its market share.
Senior Researcher at Leverage Shares Sandeep Rao believes fast-rising Bitcoin funds like BlackRock and Fidelity are now competing with Coinbase for trading volume, challenging its longstanding market position as “the dominant venue for all things crypto.”
“Several funds offering fee waivers for the next few months will seemingly reduce Coinbase’s fees,” Rao wrote in an email shared with Cryptonews. “But reduced trading volume since approval is likely to sting more over the next few quarters.”
To draw investors, several Bitcoin spot ETFs dropped their management fees to zero before launching last month, becoming some of the cheapest venues for institutions to trade and hold BTC.
The new funds have already absorbed over $10 billion since launch. Grayscale – their largest incumbent competitor – has suffered nonstop outflows totaling $6.6 billion over the same period, having decided to keep its sponsor fee at an elevated 1.5%.
BlackRock’s Bitcoin ETF in particular is already overtaking Grayscale on daily volume, averaging $750 million volume per day earlier this week. As of Thursday, Coinbase’s 24-hour BTC volume stood at roughly $900 million, per CoinMarketCap.
After publishing its Q4 earnings today, Coinbase has suffered several consecutive quarterly losses since 2022, despite the Bitcoin market rallying to new highs during that time.
Competition from other trading venues is likely to make those figures worse – especially given that roughly half of the firm’s revenue still comes from trading fees.
Coinbase also draws revenue from subscriptions and services, including USDC yield and its
