Coinbase, a cryptocurrency exchange based in the United States, announced yesterday its financial results for quarter two of 2021 via a shareholder letter. Coinbase’s quarter was marked by strong growth and a focus upon diversification across all platforms.
The trading volume increased from $28 billion Q2 2020 to $462 billion Q2 2021. This is an increase of over 1500%. Other metrics were also impressive for the exchange this quarter. Monthly Transacting User (MTU), which increased by 44% over the previous quarter, reached 8.8 million.
Coinbase had a quarter-end revenue of more than $2 billion and a net income in excess of $1.6 billion. The vast majority of Coinbase’s revenue comes from transactions on the exchange. Only 5% of it is attributed to subscriptions and other services.
The exchange’s performance was better than what analysts had predicted. According to Daily Reuters Refinitiv estimates, Coinbase’s revenue was forecasted to be $1.78 billion, a parameter the exchange crossed by almost $45 million. Coinbase shares trade at $3.45 per share, compared to the $2.33 suggested by analysts.
The shareholder letter acknowledged that the quarter’s high volatility in crypto markets was a contributing factor to the impressive results.
The first half of the quarter witnessed a massive bull run with both Bitcoin and altcoins hitting new all-time highs. In April, Bitcoin reached $64,000 and Ethereum’s value doubled in the same quarter. However, this price surge was followed by a steep decline with both Bitcoin and Ethereum falling by over 45%, leading to higher levels of volatility in the rest of the market.
” Since volatility and crypto asset prices are closely correlated with trading revenues, our Q2 financial results are heavily influenced by the crypto market environment,” explained the shareholder letter.
Another important metric was also affected by the increase in volatility and rise of altcoins during this quarter. Coinbase reported that 24% of its trading volume was in Bitcoin, compared to 39% in Q1.
The report said that while trading volume diversification beyond Bitcoin or Ethereum can be attributed in part to many factors, the main contributing factors were ” adding new assets on the Coinbase platform and increasing trading volume with other crypto-assets.”
Investors are wondering what Coinbase has in store for Q3, and Coinbase did not offer any guidance other than to state that it expects lower trading volumes this quarter.