Coinbase, one of the world’s largest cryptocurrency exchanges, reported a notable turnaround in its first-quarter financial results on Thursday (May 2).
The company posted a surprise profit of $1.2 billion, or $4.84 per share, in the three months ended March 31, a sharp contrast to the loss of $79 million, or $0.34 per share, recorded a year earlier.
This dramatic change in fortunes comes after a surge in cryptocurrency trading volumes, driven by the launch of earlier US-listed exchange-traded funds (ETFs) are tracking Bitcoin in January,
Coinbase profits rise with launch of Bitcoin ETF
The SEC’s approval of several spot Bitcoin ETFs created a frenzy in the crypto markets. Coinbase, which serves as custodian of several spot Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust, took advantage of this new investor enthusiasm. Bitcoin prices hit a new all-time high of more than $72,000 in March, bringing trading volume on Coinbase’s platform to $312 billion, more than double the $145 billion a year earlier.
CEO Brian Armstrong attributed the company’s success to its focus on cost management and innovation. “It’s really profitable to keep our cost structure low while continuing to innovate,” he said during a call with analysts. reuters,
But despite these results, Coinbase shares fell 2.5% in after-hours trading, as concerns grew over a potential drop in trading volume due to recent Bitcoin price fluctuations.
The crypto rally has faced headwinds this week, as investors reevaluate interest rate expectations. US Federal Reserve maintained its high interest rates On Wednesday (May 2), a cautious outlook for the final rate cut was signaled amid disappointing inflation readings. This uncertainty has impacted the performance of Bitcoin.
Coinbase has specifically capitalized on the high interest rates by increasing its interest income from USD Coin (USDC) reserves. The company’s interest and finance fee income rose to $66.7 million in the first quarter, from $43.3 million a year earlier.
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