Binance, the biggest beneficiary of the fine! For the first time in two years, Coinbase turned its losses around, and its stock soared after hours, rising 140% in the past 12 months.

Coinbase Global achieved quarterly profit for the first time in two years, benefiting from the rise in cryptocurrency prices and increased interest income from stablecoins.

According to the financial report, Coinbase achieved a net profit of $273 million ($1.04 per share) in the fourth quarter, reversing the loss of $557 million in the same period last year. This marks the first quarterly profit in two years and a turnaround for Coinbase.

According to FactSet, Coinbase's actual performance significantly exceeded analysts' expectations of earnings per share of 2 cents and sales revenue of $826 million. Coinbase's sales revenue increased from $629 million a year ago to $954 million.

After the financial report was released, Coinbase's stock price rose 12% to $185 in after-hours trading on Thursday. Before the market opened on Friday, Coinbase rose more than 12%. In the short term, Coinbase's stock has fallen by about 5% so far this year (while Pro UltrPro Shrt S&Pro 500 has risen more than 5%). Over the past 12 months, Coinbase's stock price has surged by 140% (while Pro UltrPro Shrt S&Pro 500 has risen by about 21%).

Coinbase's management mentioned in a letter to shareholders that the increase in market risk appetite, the positive impact of the approval of a Bitcoin spot ETF, and optimistic expectations for future macroeconomic improvements have collectively contributed to the increase in market risk appetite, which has benefited Coinbase's performance.

Market risk appetite has increased, and trading activity has risen.

Coinbase mentioned some key drivers of the company's performance growth:

1. Increased volatility of cryptocurrency assets: Coinbase's management mentioned in a letter to shareholders that they have observed a significant increase in the volatility of cryptocurrency assets, similar to the situation in early 2023. Increased volatility of cryptocurrency prices usually leads to an increase in trading volume, as investors seek to buy at low prices or sell at high prices. This is beneficial for trading platforms like Coinbase, as Coinbase can earn more transaction fees from it.

Public data shows that Coinbase's total trading volume increased from $145 billion a year ago to $154 billion in the fourth quarter. In December, it was $67.2 billion, and in January, the spot data was $75.7 billion, showing a monthly increase in trading volume. Analysts believe that as of February 13th, Coinbase's trading revenue was $320 million, and the fourth quarter was $529 million. Linearly inferring, the first quarter would be $650 million, with a MoM increase of $120 million and a growth rate of 22%. 2) Approval of Bitcoin Spot ETF: Coinbase pointed out that one of the main reasons for its performance growth is the approval of the Bitcoin Spot ETF. The approval of the Bitcoin Spot ETF is seen as an important step for the cryptocurrency market to enter the mainstream financial world, as it provides ordinary investors with a relatively simple and secure way to invest in Bitcoin. Such news typically increases market interest and investment in cryptocurrencies, thereby driving up trading volume and prices.

Analysts believe that the approval of the ETF has a positive impact on Coinbase, including increased trading volume and custody revenue. The negative impact includes some users potentially shifting to the ETF market and fee pressure, but this impact is considered relatively small.

3) Expectations of improved macroeconomic conditions: Coinbase also mentioned that the widespread expectation of improved macroeconomic conditions in 2024 has also contributed to "risk appetite" activities in the capital markets. When investors anticipate an economic improvement, they may be more willing to take risks and seek higher returns, leading to more investment activity, especially in the cryptocurrency market, which is considered high-risk but with high potential returns. Coinbase states that part of the reason for its profit and revenue growth is the increase in market "risk appetite," which has led to increased activity in the cryptocurrency market, often resulting in increased trading activity.

Looking ahead, Coinbase is confident in its current situation and future prospects.

In terms of performance guidance, the company expects first-quarter subscription and service revenue to be between $410 million and $480 million. The company also revealed that as of Tuesday, its trading revenue was approximately $320 million, and it expects to continue to generate stable revenue from its services and transaction fees.

Coinbase expects first-quarter research and development expenses, as well as administrative expenses, to increase to $600 million to $650 million, as Coinbase increases its technology and administrative expenses to support long-term growth.

In terms of self-assessment, Coinbase wrote in its letter to shareholders:

"Today's Coinbase is fundamentally a stronger company than a year ago, with a strong financial position and the ability to seize future opportunities."

In addition, Coinbase is actively engaged in political and social activities to promote wider acceptance and support for cryptocurrencies.

Regarding compliance, Coinbase states that regulatory uncertainty has been a major challenge in the cryptocurrency industry, affecting operational decisions of companies and investor confidence. Coinbase mentioned that it is actively engaging in dialogue with regulatory agencies on compliance matters, aiming to promote a more clear and friendly regulatory environment. By working with regulatory agencies, Coinbase is committed to ensuring that its platform complies with regulatory requirements worldwide and provides users with a secure and compliant trading environment. At the same time, Coinbase also supports the efforts of "Standing With Crypto", an organization aimed at attracting one million cryptocurrency advocates to help promote pro-cryptocurrency policies.

In addition, Coinbase has made significant progress in product innovation. They have launched Coinbase International Exchange, derivative products on Coinbase Financial Markets, and innovative products such as Base. They have also obtained licenses or started operations in six new markets.

In terms of institutionalization, in the United States, 8 out of 11 BTC spot ETFs have chosen Coinbase as their custodian broker. Among the top 100 hedge funds in the world, 33% have chosen to go live on Coinbase.

Analysts believe that the better-than-expected earnings report helps alleviate market concerns about Coinbase. At the same time, Coinbase's coverage and recognition in the institutional sector contribute to the continuous expansion of ETF custody. Ensuring compliance and expanding business globally will be the guarantee for its future stable development.