Coinbase rides bitcoin ETF frenzy to first quarterly profit in 2 years

Coinbase Global (COIN) posted its first quarterly profit in two years as trading surged on a new wave of optimism about digital assets, marking a potential turning point for the largest US cryptocurrency exchange.

Investors cheered the news, sending the stock of Coinbase up more than 12% in after-hours trading. The stock is down 5% so far in 2024 as of Thursday’s close but has soared 180% over the last year.

Coinbase earned $273 million in profits during the fourth quarter, well above analyst expectations. It was the first positive quarterly earnings result since the fourth quarter of 2021, when the last crypto boom was still raging.

The surprising fourth-quarter performance lifted its full-year result to a net profit of $95 million.

Among the reasons Coinbase surged into the black: It attracted more traders to its platform and more clients for its subscription and services business. Total transaction revenue jumped 64% to $529 million.

It also benefited from a $121 million non-cash release that had been set aside for taxes along with $18 million gain from repurchasing debt.

What helped drive more people to Coinbase’s platform was a surprise market rally triggered by speculation that the Securities and Exchange Commission might grant approval for spot bitcoin exchange-traded funds.

The ETFs would allow investors to get exposure to the world’s largest cryptocurrency without having to own it, potentially widening the mainstream appeal of digital assets.

The SEC eventually granted those approvals in early January, and Coinbase served as custodian for eight of the 11 ETFs. The company can benefit by working with ETF issuers through its custody, prime trading, and trade settlement businesses.

Bitcoin (BTC-USD) has since surged above $52,000, its highest point since 2021. It is still far from an all-time high of $68,789 set in 2021, a year it benefitted from a period of low interest rates and…