Coinbase, one of the world’s most popular exchanges will be available for public trading on the Nasdaq’s on Wednesday 14th. With earning’s figures surpassing expectations, the IPO is a major event to look out for as a proxy for cryptocurrency markets.

As revealed last week‘s earnings report, the crypto exchange saw a massive 117% quarter-on-quarter increase in user transactions. Those users directly facilitated over $1.8 billion in Coinbase revenue during the quarter, driving a net income of about $730 – $800 million according to the filing.

As it happens, all numbers point to the business riding high as interest in crypto continues apace with interest in the popular exchange.

Data points of interest

  • Coinbase active users jumped from 2.8 million in the fourth quarter of 2020 to 6.1 million in the first quarter of 2021.
  • KYC’d accounts increased from 43 million at the end of 2020 to 56 million in Q1 2021.
  • Trading volumes reached $335 billion in Q1, in comparison to $193 billion for all of 2020.
  • Total assets on Coinbase increased 150% increase quarter-over-quarter from $90 billion to $223 billion.

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Of the major inflows that made it to the exchange, some $122 billion of assets came from institutional investors.

On the retail end of the spectrum, the company will be adding more assets in time, providing access to decentralised finance (DeFi) applications among other assets, said Coinbase CEO Brian Armstrong during last week’s earnings call.

On the institutional end, the exchange will continue to build its prime brokerage offering to create what Armstrong called the “Aamazon Web Services for Crypto”.

Three scenarios for the remainder of 2021

The exchange also laid out three financial scenarios for the rest of 2021.

In a “high” performance environment, Coinbase would average 7 million monthly users if the crypto market capitalisation continues to grow throughout the rest of the year. In a “mid” scenario, the exchange would still average 5.5 million monthly users in a flat or sideways market. In a “low” scenario, the exchange would average 4 million if the market turns into a full blown 2018-style bear market.

For the last two years we’ve seen average net revenue per [monthly transacting user] range between $34 and $45 per month,” Coinbase CFO Alesia Haas said on the call. She expects the average net revenue per user to set new records in 2021.

A proxy for crypto performance?

Coinbase’ performance is essentially a proxy-metric for the crypto market performance. as pointed out earlier, the company made $335 billion in the first quarter of 2021 as opposed to the $193 billion it made for all of 2020 – this sets a precedent for high performance expectations around the exchange listing.

Once the listing is live on the Nasdaq, general awareness of crypto will enter a new paradigm if these figures are anything to go on. Since Coinbase revenues are essentially tied to crypto trading volumes on the platform, traditional investors are unlikely to hold back on this major exchange listing.

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