Coinbase Global shares fell on Thursday following recent stock gains.
Bitcoin
Prices tend to drive up the stock prices of crypto brokers. Investors may be eyeing the prospect of new stiff competition in US crypto trading.
CME Group
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The Chicago-based trading firm plans to launch spot trading in Bitcoin due to interest from Wall Street money managers, the Financial Times reported Thursday, citing anonymous sources. Ta. CME declined to comment in response to inquiries. Barons.
Brett Tejpaul, head of Coinbase Institutional, said in a statement that Coinbase is “excited to have yet another of the world's most regulated players looking to accelerate institutional adoption of cryptocurrencies.” Stated. “As we saw with the Bitcoin ETF, this is something that benefits the entire ecosystem, and we look forward to doing everything we can to support CME with Coinbase’s world-class custody and prime services.”
Bitcoin's impressive rally over the past nine months has done wonders for Coinbase stock, which has nearly quadrupled in price over the past year, but could also invite more competition into the crypto brokerage business. . CME already has a booming crypto derivatives trading business and could be a strong competitor if it were to enter the spot trading space.
If CME actively enters Bitcoin spot trading, it would be bad news for Coinbase. Indeed, much of Coinbase's core brokerage revenue still comes from retail investors—consumer trading revenue was $935 million in the first quarter, compared to transactions from institutional investors. Revenue was $85 million — but there's no avoiding money from institutional investors.
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The approval of a Spot Bitcoin exchange-traded fund (ETF) earlier this year further encouraged Wall Street heavyweights and financial institutions to consider the cryptocurrency more broadly, at least in part. That's reflected in Coinbase's results, with consumer trading volume up 93% quarter over quarter in the first three months of this year, while institutional trading volume grew 105%. Revenue growth in Coinbase's institutional business also outpaced that of its consumer business.
Coinbase weathered the brutal bear market that rocked digital assets in 2022 and 2023, proving that cryptocurrencies are the closest thing to a blue-chip stock. Management is focused on diversification, and early signs suggest new spots will be on the lookout. While Bitcoin ETFs are competitive in terms of fees, they are not stealing large amounts of trading volume from Coinbase.
However, competition with CME in its main business of Bitcoin trading still requires careful attention.
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— Joe Light contributed to this story.
Email Jack Denton at jack.denton@barrons.com.
