Bitcoin reportedly rose to $ 48,000, but it seems that Coinbase Global did not benefit from it. Since late July, it has undergone only around 10% rebound even though Bitcoin was up 60% over that period.
Of course, the gap is not to be worried about, but according to a report by Needham analyst John Todaro, Coinbase (ticker: COIN) is more than just a crypto trading site so it will grow in value as it becomes a platform for new industry-related activities. In fact, it was up 0.1% on Tuesday and hit $ 256.27.
Among the services currently offered by Coinbase is the staking process, which allows crypto holders to deposit their assets into pools that help verify transactions on blockchains and make money from it. Coinbase takes 25% of the commission and gives the rest to users. Although this is a small portion of the company's revenue, it is up 271% from the previous quarter. Coinbase is also launching other income accounts that can help a company go beyond transactions.
But the bearish argument against Coinbase is that it charges high fees per transaction and loses customers to companies like Robinhood Markets, which does not charge a prepayment. Robinhood makes money from cryptocurrencies similar to how it makes money from stocks: by narrowing the bid / ask price spread for each transaction. In the last quarter, Robinhood experienced a huge leap forward in crypto trading, especially with Dogecoin.
Robinhood CEO Vlad Tenev said they are proud of the prices and costs they offer to clients, especially when compared to their competitors. Some companies charge commissions and transaction fees of a few percent, while Robinhood is commission-free. But the difference of Robinhood from Coinbase is that users do not have their own cryptocurrency as they cannot transfer it from the platform.
Meanwhile, Coinbase CFO Alesia Haas said they are not competing on fees as they are focusing on providing the best services to their customers, especially in terms of security, storage and trade execution.
Todaro believes that Coinbase fees will not scare off users due to the unique nature of cryptocurrencies. In addition, unlike stock-trading fees that dropped to zero for almost all brokerage firms, crypto trading has not been commoditized in the same way. Surveys have also shown that users are more interested in the liquidity of an exchange or trading platform, uptime and the range of tokens available.
"In our view, Coinbase has done a good job of offering new assets and new products in a regulatory compliant manner, maintaining uptime, offering deep liquidity pools, and ensuring exchange reliability, as evidenced by the lack of a successful exchange hack," Todaro added.
