Written by Hannah Lang
(Reuters) – Coinbase Global's first-quarter profit beat a year earlier, helped by increased crypto trading following the launch in January of the first U.S.-traded exchange-traded fund (ETF) to track Bitcoin. The company turned from a loss to a surplus of more than $1 billion.
The company on Thursday reported net income of $1.2 billion, or $4.84 per share, for the three months ended March 31, compared with a loss of $79 million, or $0.34 per share, a year ago. Ta.
Coinbase shares were down 2.5% in after-hours trading after closing nearly 9% higher.
Paul Marino, chief revenue officer at investment firm GraniteShares, said: “Despite very strong reports, the stock price declined in after-hours trading due to concerns that trading volume will decline as Bitcoin falls.'' has fallen,” he said.
After a decade of battles with the cryptocurrency industry, crypto prices soared in January after the U.S. Securities and Exchange Commission approved a wave of exchange-traded funds (ETFs) that track the spot price of Bitcoin. .
Coinbase is the custodian of several spot Bitcoin ETFs, including BlackRock's iShares Bitcoin Trust.
The enthusiasm for ETFs drove Bitcoin to a new record high of over $72,000 in March, reigniting investor enthusiasm for the digital asset. Coinbase's trading volume in the first quarter was $312 billion, compared to $145 billion in the same period last year.
“Keeping our cost structure low while continuing to innovate is really paying off,” CEO Brian Armstrong said on a conference call with analysts.
But Bitcoin has struggled in recent weeks as investors readjust their interest rate expectations.
The US Federal Reserve raised its benchmark interest rate on Wednesday after tightening monetary policy at an unprecedented pace. It signaled it was still leaning toward ultimately reducing borrowing costs, but said recent inflation data had been disappointing, underscoring that rate cuts could be delayed further.
The rise in interest rates has allowed Coinbase to increase its interest income. Coinbase earns interest on its reserves from USD Coin (USDC), a stablecoin it jointly manages with cryptocurrency company Circle. USDC is a cryptographic token designed to have a relatively stable price and is backed by dollars and equivalent assets held by banks and other financial institutions.
Coinbase recorded interest and finance fee income of $66.7 million in the first quarter, compared to $43.3 million in the year-ago period.
(Reporting by Hannah Lang in New York; Editing by Michael Ehrman and David Gregorio)
