The Coinbase exchange and COIN stock

US cryptocurrency exchange Coinbase reported disappointing data at the end of the third quarter of the year, reporting declining volumes in the spot market. however, COIN stock seems unaffected on Nasdaq.

While we await the company’s Q3 earnings release on 2 November, we can already guess that fee income will also be down, as it is proportional to the amount of trading that takes place on the platform (counting derivatives, of course). 

Nevertheless, the price of COIN, which is listed on the Nasdaq, remained more or less the same as at the beginning of the quarter, leaving intact the bullish structure of the asset, which could perform very well in 2024.

One hedge fund in particular is accumulating COIN in anticipation of the expected bullish season for cryptocurrencies, which should also see Coinbase’s asset rise in value on the markets.

Let’s look at the details together

Coinbase exchange and the collapse of spot trading volumes in Q3 2023

According to an analysis by digital asset data provider CCData, cryptocurrency exchange Coinbase posted disappointing figures for spot trading volumes in the third quarter of the year.

Specifically, from July to September, Brian Armstrong‘s company recorded spot trading volume of $76 billion, a drop of more than 50% compared to the figures marked a year ago.

In the third quarter of 2022, the cryptocurrency exchange had supported transactions of more than $150 billion within the spot section of the platform. The current figures are also the lowest ever recorded since Coinbase decided to list on the US stock exchange in 2021 under the ticker COIN.

This decline is not necessarily due to the shortcomings of the exchange itself, but rather to the unfavourable conditions facing the crypto market today, which is in deep crisis compared to the numbers recorded during the bull market of 2021.

At a time of macroeconomic uncertainty, with several wars on the horizon and the US FED having withdrawn its stimulus measures over the past year and a half, it is perfectly normal for these highly speculative environments to experience a moment of difficulty due to a decline in users.

Indeed, it is the entire crypto sector, not just Coinbase, that has seen declining numbers on the exchange front over the past two quarters.

On the contrary, the Nasdaq-listed company actually increased its market share after Binance came under pressure from regulation in the US and lost ground for the seventh consecutive month.

According to CCData, it was Coinbase, along with other platforms such as Bybit and DigiFinex, that gained the market share lost by the leading crypto exchange.

However, Binance remains the dominant exchange for spot trading with over $4.9 billion traded in the last four hours, compared to Coinbase’s $814 million and Kraken’s $539 million.

Numbers grow for DEX at the expense of centralised exchanges

Still on the subject of crypto spot exchange volume figures, it is interesting to note that decentralised platforms are gaining more and more market share, so much so that they recently surpassed the 20% threshold against centralised counterparts such as Binance and Coinbase.

Since September, this figure seems to have exploded, reaching a new all-time high, confirming the growth of the DeFi sector and the maturity it has achieved in recent years.

Consider that in May 2020, the ratio of spot volume between DEX and CEX was no more than 1% of total transactions: today we are at around 26%.

Coinbase has known for some time that this trend would grow, given the evolution of decentralised environments and the strong development taking place on them.

In fact, in order to cover part of this market, it decided a few months ago to launch its own Layer-2 on Ethereum, i.e. Base, which to date represents the eighth largest chain in terms of TVL and the ninth largest in terms of volume traded over the last 24 hours.

In detail, according to DefilLama‘s data, the optimistic rollup managed by Coinbase has a locked-in value within its protocols of 314 billion dollars (over 500 million bridged from the Ethereum mainnet) and a volume in the last 24 hours of around 25 million dollars.

Market performance of COIN on the US stock market: watch out!

Turning now to market analysis, we can see that COIN shares seem to have withstood the collapse in volume on the exchange and are currently trading at a price almost identical to where Coinbase opened Q3 of the year.

Although there was a dip in price in July and August, the medium-term structure for the stock remains intact, with the odds of a move higher than a move lower in the coming months.

Since the beginning of the year, COIN has risen 112%, confirming its position as one of the top assets to hold in a portfolio in 2023.

Pre-market prices currently stand at $77.65, with the Supertrend indicator signalling fertile ground for a continuation of the stock’s bullish run.

After a long period of declines in 2021 and 2022, COIN looks poised to begin its rally back to all-time highs.

Some hedge funds have increased their bullish positions on Coinbase shares, predicting growth for the exchange and the broader crypto market in 2024.

One of them is Cathie Wood‘s “ARK Invest”, which revealed in its latest 13F filing that it had ì’098765432.

In total, the fund, which is battling the SEC for approval of the first US spot bitcoin ETF, holds 12,121,881 shares worth $867 million, making it the fifth largest shareholder in the asset.

Only VanEck’s fund, a16z, Paradigm’s co-founder and Coinbase’s CEO are ahead of ARK, which owns 6.3816% of all outstanding shares.

This underlines ARK’s efforts to increase its presence in the crypto market and Cathie Wood’s belief in the bullish potential of the crypto industry in the coming years.

It should also be noted that BlackRock, the world’s largest asset management fund, is also among COIN’s largest shareholders with an investment of $573 million.