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Positive Data for Q4, Coinbase Surges 14% Pre-Market

As the largest cryptocurrency exchange by volume in the US, Coinbase has been steadily growing after some difficult quarters. However, it turns out that the continuous rise of the crypto market has benefited the exchange, as Coinbase reported a net profit of $273 million for Q4 2023.

Coinbase achieves profitability The data shows that this is the first time the company has posted a positive net profit since Q4 2021. This good news helped Coinbase Global Inc (Nasdaq ticker: COIN) stock price soar more than 14% in pre-market trading.

Coinbase’s stock price closed at $165.67 on the previous trading day, up about 110% over the past 6 months.

However, the positive financial performance was driven by the soaring interest in cryptocurrencies. This became very evident after the US Securities and Exchange Commission (SEC) approved the spot Bitcoin exchange-traded fund (ETF).

Coinbase’s net revenue for Q4 2023 was $905 million. This was an increase of nearly 50% compared to the same period last year, which was $605 million. The SEC’s approval of the spot Bitcoin ETF played a crucial role here. The Bitcoin ETF enabled retail investors to access Bitcoin through regulated exchanges.

What else is in the report?

The report shows that Coinbase’s consumer trading revenue for the quarter was $493 million. This means that it increased by 79% quarter-on-quarter. Coinbase’s chief financial officer Alesia Haas said that despite the higher trading volume, the company did not need to adjust its fees. This was because the fee rate was affected by the mix shift between “simple” and “advanced” traders.

It is worth noting that Morgan Stanley recently upgraded Coinbase’s stock price to neutral. The investment giant pointed out that after the spot Bitcoin ETF was approved, the crypto prices surged. The rise in crypto prices is expected to have a positive impact on Coinbase’s activity level and revenue for Q1.

Morgan Stanley acknowledged the recent positive developments, but warned that based on valuation analysis, Coinbase’s stock price may underperform by 2024. The stock price rose nearly 400% last year.

Bitcoin is the largest cryptocurrency, and its price has quickly exceeded the expectations of the bears. The BTC bulls target now is to take the $53,000 price level after breaking the $1 trillion market cap.

As of press time, the average trading price of Bitcoin was $52,307. Its 24-hour trading volume fell 4%, to $35 billion.

Sentiment: Positive

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