Bitcoin, Ethereum Account For This Much Of Coinbase’s Assets: Financial Results Decoded

Btc $28,377.40 3.32% ETH $1,819.41 4.16% XRP $0.44 4.69% ETC $20.83 2.86% BCH $128.80 1.80%

Bitcoin, Ethereum Account For This Much Of Coinbase’s Assets: Financial Results Decoded

2022-07-14 | Selina Mathew

The rise of cryptocurrencies and the proliferation of exchanges have caused an explosion in Coinbase’s asset value. But how much are they worth? And how has their market share changed over time?

BTC and ETH represented nearly 95% of assets in Q1

Bitcoin and Ethereum accounted for nearly 95% of Coinbase's assets in the first quarter. In Q4 2018, BTC represented 80% of its balance sheet; ETH represented 70%. In Q1 2019, they were both at 80%.

Coinbase’s market share fell in Q1

What does this mean for Coinbase?

The decline in market share is a sign that the company's assets are less popular than they were in previous quarters. However, considering how much of Coinbase's assets were tied up in Bitcoin and Ethereum at the time of Q1’s financial results, that isn't necessarily surprising.

In fact, it makes sense to assume that if you're using cryptocurrency as your primary form of payment and investing—as many people do—then you'd be buying more of those two coins than any others (and vice versa).

This doesn't mean that there aren't other cryptocurrencies worth buying on Coinbase or elsewhere; just because one coin has declined doesn't mean all others have grown at equal rates.

But since most people tend not to diversify their portfolios by hunting around until they find something interesting enough "to buy," these changes may indicate some sort of shift toward more stable currencies like USDT or TUSD instead.

Net inflows accelerated in Q1 2021

The net inflows accelerated in Q1 2021 and were $8 billion. This was the first quarter to have a negative net outflow since the financial crisis, as investors were attracted by the price of bitcoin and other cryptocurrencies. During this period, Coinbase reported that it had approximately $45 billion in assets under management (AUM).

It also said that its revenues increased from $1.2 billion in Q4 2019 to $2 billion this year, while expenses climbed from $766 million last year to over $1 billion so far this year. In fact, according to its financial report published on May 31st, 2019: "The increase in our total number of customer accounts nearly doubled since December 2018."

Transaction revenue made up most of Coinbase’s earnings in the quarter

The most important part of Coinbase’s financial results is the transaction revenue. This is the amount of money Coinbase earns by buying and selling bitcoin and other cryptocurrencies.

Transaction volume is up, but it’s not quite enough to make up for the decline in transaction fees, which are down from $0.15 per transaction last year to just over $0.10 this year—and there's no sign they're going back up soon!

Coinbase saw a drop but still had positive net earnings.

The decline in the price of crypto assets and the rise in other business expenses helped cushion the impact on the company's bottom line. Market share fell slightly to 44% from 45%, while transaction revenue fell by 8%. In total, Coinbase made up more than two-thirds of its total revenue before taxes (TTR), which was $1 billion last quarter.

Takeaway

Coinbase’s financial results are now available for everybody to examine. It’s an opportunity to see how the leading cryptocurrency exchange is performing, especially in light of recent events. But there’s even more to it than that, since we can also see how the Bitcoin and Ethereum markets are evolving as a whole and how Coinbase is dealing with it.

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