Coinbase Profits from Trump's Return, but a Threat Looms

The 2024 U.S. presidential election has rekindled interest in cryptocurrencies, particularly benefiting Coinbase. With an increase in trading volumes and an influx of institutional investors, the crypto platform is seeing its prospects evolve. However, the decline in retail trader activity poses a challenge to its long-term profitability.

Coinbase explodes by 40% since Donald Trump’s election!

The November 2024 U.S. presidential election, which saw Donald Trump’s victory, has reignited interest in cryptos, leading to a significant increase in trading volumes on major exchanges. Coinbase has particularly benefited from this dynamic.

According to a recent report by Kaiko, weekly trading volumes on the crypto platform reached their highest level in two years in the fourth quarter of 2024, mainly due to the influx of institutional investors. Additionally, Coinbase’s stock has risen by about 40% since this victory, a positive trend that could be reflected in Coinbase’s upcoming quarterly earnings report scheduled for February 13, 2025.

Persistent challenges

Despite this increase, the participation of retail traders, who generate the highest fees, has remained modest. Their share of total volume dropped from 40% in 2021 to only 18% in 2024. In response to this situation, Coinbase has expanded its offerings to include services such as blockchain rewards, custody fees, and interest generated by USDC. These subscriptions and crypto services have represented a growing share of its total revenue.

However, these revenue sources remain closely linked to the overall activity of the crypto market. For example, in the third quarter of 2024, Coinbase’s revenues from blockchain rewards decreased by 16%, primarily due to falling prices of Ether (ETH) and Solana (SOL).

Thus, Coinbase finds itself at a strategic turning point, driven by the momentum of institutional investors but hampered by the decline of retail traders. The election of Donald Trump has certainly rekindled optimism in the crypto market, but the platform must innovate and adapt to regulatory changes to ensure its long-term growth.