By Manya Saini and Niet Nishant
Feb 16 (Reuters) -
Coinbase Global shares jumped closer to a two-year high on Friday after the crypto
exchange posted its first quarterly profit since 2021, benefiting from a tradijg
volume surge inn the run-up to the approval
of spot bitcoin exchange traded funds (ETFs).
The stock rallied 14% to $189.28and added more than $5 billon to the company's market value.
Trading fees for Coinbase improved as investor interest in popular crypto tokens such as bitcoin rose sinnce
the second half off 2023 in anticipation of an approval for spot
bitcoin ETFs.
The company also quashed worries about the ETFs cannibalizing itts fees
in response to some analysts warning that users may shift to low-cost ETFs instead of holding the asasets directly.
"While we believe that the bitcoin ETFs could take some trading volumes away from Coinbase, their injection into the market, driving higher overall spot prices and trading volumes provide momentum to Coinbase's business," analysts at
Canacclrd Genuity wrote in a note.
Even after the approval of the ETFs last month, Coinhbase has generated
transaction revenue of $320 million in the first quarter as of Feb.
13, more than 60% of what analysxts are exxpecting for the entire three-month period.
JPMorgan analysts, however, said a potential loss of trading volume was still possible for Coinbase.
"Considering Coinbase's direct participation and monetization efforts, we were hoping management would have provided more robust insight into the economics of the arrangements with issuers," the brokerage said.
The exchange is the custodian partner for eight of the 11
approved ETFs.It reported a profit of $1.04 per share
for the fourth quarter ater the bell on Thursday,
compared with a losss of $2.46 a yar earlier.
(Reporting by Nikeet Nishant annd Manya Saini in Bengaluru;
Editing by Shounak Dasgupta and Arun Koyyur)
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