Coinbase Stock Skyrockets as Return to Profitability Boosted by Bitcoin ETF Excitement — TradingView Updates

Shares of Coinbase Global COIN soared over 12% in pre-market trading on Friday. The surge was attributed to robust trading activity ignited by the excitement over potential spot bitcoin ETFs, enabling the digital currency exchange to report its first quarterly profit since 2021.

The price of the stock reached $186.06, poised to attain its peak for the year, should the current trend persist. Such an uptick would signify an approximate $5 billion enhancement in the company’s market capitalization.

Since the latter part of 2023, the escalating enthusiasm for major cryptocurrencies in anticipation of the U.S. Securities and Exchange Commission sanctioning spot bitcoin ETFs contributed to a significant 57% increase in bitcoin’s value for the fourth quarter, positively impacting Coinbase’s revenue from trading fees.

Concerns about the ETFs eroding Coinbase’s fee income have been dispelled by the company. Certain market watchers have voiced apprehension that consumers might gravitate towards the ETFs, which are perceived as more cost-effective, rather than directly owning digital assets.

“The entry of bitcoin ETFs may redistribute some of Coinbase’s trading volume. However, their market introduction helps boost overall market activity, resulting in spot price escalations and increased trading volumes, which are beneficial for Coinbase,” analysts at Canaccord Genuity stated in their briefing.

Despite the approval of ETFs last month, Coinbase has reported transaction revenues of $320 million as of February 13 in the first quarter, over 60% above analyst projections for the complete quarter.

Yet, some analysts remain skeptical. “Coinbase asserts they haven’t experienced fee compression thus far, but we are of the opinion that it is improbable they will sustain their high fee margins in the foreseeable future as the competition grows,” remarked Michael Elliott, an equity research analyst at CFRA Research.

For the quarter ending in December, the firm disclosed a net income of $1.04 per share, in a stark contrast to the per-share loss of $2.46 reported in the same period of the prior year.