Coinbase Stumbles on Trading Front but Bets Big on Derivatives Expansion

Coinbase delivered a somewhat turbulent Q1 earnings report on May 8, revealing a 10% drop in total revenue from the previous quarter to $2 billion—falling short of analyst expectations by just over 4%. The decline was primarily driven by a notable slowdown in trading activity, a trend consistent across the broader crypto market. 

Net income saw a dramatic 95% plunge, falling from a robust $1.29 billion in Q4 to just $66 million. This sharp drop, however, wasn’t due to operational failure—it stemmed largely from a $596 million unrealized loss on its crypto holdings, which Coinbase was required to mark on its books.

Despite the headwinds, Coinbase managed to outperform Wall Street’s consensus estimate on earnings per share, reporting $1.94 versus the expected $1.85. Still, transaction-based revenue—which traditionally drives the lion’s share of Coinbase’s income—fell 18.9% to $1.26 billion. 

Trading volumes also shrank by 10.5% to $393 billion, as the total crypto market cap reeled under pressure, partly due to geopolitical turbulence like Trump’s reintroduced tariffs.

Stablecoin Strength and Global Reach

Not everything in the report was grim. Coinbase’s subscription and services segment continued to shine, registering an 8.9% increase to $698.1 million. A large portion of this growth came from stablecoin revenue, which has remained resilient even as the broader market showed signs of exhaustion. 

Furthermore, the exchange revealed that it had gained global market share in both spot and derivatives trading. The exchange also highlighted progress in expanding its regulatory footprint, securing key approvals in emerging crypto markets like Argentina and India—an encouraging sign for its long-term strategy.

The firm also took a victory lap on the regulatory front, stating that a recently dismissed lawsuit from the U.S. Securities and Exchange Commission represented a win for sensible crypto oversight. Coinbase framed it as a step forward in aligning innovation with regulation.

Coinbase Deribit Deal

The day’s biggest headline came not from the earnings call but from the announcement of Coinbase’s acquisition of Deribit, a leading crypto derivatives exchange. The $2.9 billion deal is the largest in crypto industry history and signals the exchange’s ambitions to deepen its presence in the high-volume derivatives sector. 

Deribit reported $1 trillion in trading volume in 2024 and currently boasts $30 billion in open interest—numbers that Coinbase will now inherit as part of its expanding empire.

With derivatives now in play, the exchange appears to be reconfiguring its core growth strategy to thrive in a maturing, yet volatile, crypto landscape.