Coinbase kicked off 2025 with a mixed earnings report, missing Wall Street’s Q1 revenue expectations amid declining crypto trading activity and broader macroeconomic headwinds. The exchange reported $2.03 billion in total revenue for the quarter, falling short of the $2.12 billion analyst forecast and marking a 10% decline from Q4 2024.
Net income plunged to $66 million, a 94% drop from the near-record highs of late last year, while earnings per share fell steeply to $0.26—down from $4.84 during the same period in 2024.
The downturn mirrors wider market struggles during Q1, as crypto volatility and renewed geopolitical tensions—including aggressive new U.S. trade tariffs under President Donald Trump—shook investor sentiment. Bitcoin, which started the year around $83,500, slid 10% during the quarter before rebounding above $102,000 in April.
Transaction revenue, historically Coinbase’s core business driver, fell 19% quarter-over-quarter. However, the company’s subscription and services division posted modest gains, buoyed by growing stablecoin-related income and recurring institutional products.
With market conditions stabilizing and investor focus shifting toward derivatives and infrastructure, Coinbase’s upcoming $2.9 billion acquisition of crypto options exchange Deribit could be pivotal to its 2025 growth narrative.
Coinbase Turns to Derivatives Expansion as Trading Revenue Slumps
Despite reduced retail volume, trading remains the cornerstone of Coinbase’s revenue—accounting for more than 60% of Q1 earnings. To offset the decline, the company is accelerating its push into derivatives with Thursday’s announcement of its $2.9 billion acquisition of Deribit, the world’s leading crypto options exchange.
The move is part of a broader strategy to diversify the trading suite and boost global reach at a time when spot trading demand is softening. Coinbase executives also pointed to favorable regulatory tailwinds. Manish Gupta, head of Coinbase Institutional, highlighted growing legislative alignment between federal agencies and Congress as a potential catalyst for long-term growth.
“We’re going to see this play out in layers,” Gupta said, referencing the ongoing coordination between the SEC, White House crypto task forces, and Capitol Hill lawmakers.
Still, investor sentiment remains cautious. Coinbase shares rose 5% during Thursday’s trading session but dipped in after-hours trading. Year-to-date, COIN is down 16%, reflecting persistent uncertainty around regulation and the macroeconomic outlook.
Stablecoins and Layer-2 Focus Provide Strategic Cushion for Coinbase
As crypto markets adjust to post-election dynamics under President Trump, Coinbase is shifting its strategic focus toward long-term infrastructure and recurring revenue streams.
One of its most successful bets so far is its deepening partnership with Circle, the issuer of USDC. Coinbase earned $297 million in Q1 from its revenue-sharing agreement with Circle—a 51% year-over-year increase. Executives noted that USDC usage on the platform has increased tenfold since 2023, driven by its growing role in payments and DeFi.
This surge comes amid bipartisan momentum in Washington for stablecoin-specific legislation, which could further legitimize and accelerate adoption of U.S. dollar-pegged assets.
Coinbase is also betting on scalability through its Layer-2 network, Base, which is designed to reduce transaction costs and improve blockchain throughput. Together, these moves reflect a broader pivot toward infrastructure, stablecoin-based products, and institutional services—areas expected to provide more reliable income as speculative trading cools.
Quick Facts
- Coinbase reported $2.03 billion in Q1 revenue, up 24% year-over-year but below analyst expectations.
- Adjusted EPS came in at $1.94, but net income dropped 94% quarter-over-quarter to $66 million.
- Trading revenue declined 19% to $1.26 billion amid lower transaction volume.
- Coinbase announced a $2.9 billion deal to acquire Deribit, expanding into crypto derivatives.
- Coinbase stock is down 16% year-to-date, reflecting broader market caution.
