Coinbase's fourth quarter total revenue was $1.8 billion, below expectations of $1.83 billion, while trading revenue also reached $983 million, below expectations of $1.02 billion, causing the company to miss overall revenue expectations.
The results were announced as the value of the company's digital asset portfolio declined as trading volumes declined due to falling crypto prices. Coinbase stock has lost about 37% of its value since the beginning of the year.
The market weakness has been particularly pronounced, with Bitcoin down about 50% from its October peak. The decline has isolated most retail investors and led to speculation that a cycle similar to previous crypto bear markets could repeat.
However, Coinbase executives claim they came into this cycle better prepared than in the past. The company has sought to reduce its reliance on spot trading revenue in recent years.
One of Coinbase's most important sources of revenue comes from stablecoins. The majority of the company's revenue comes from revenue sharing related to USD Coin (USDC) issued by Circle Internet Group Inc.
Needham analyst John Todaro said stablecoin revenues are more predictable than higher-margin volume-based fees and suggested the business unit could provide significant support for the company in 2026.
However, a stablecoin bill being negotiated in Washington could restrict exchanges from offering rewards on users' stablecoin balances. This could directly impact Coinbase's revenue sharing model with Circle.
In January, CEO Brian Armstrong withdrew his support for the bill. It was also reported that corporate representatives and banking executives held two separate meetings at the White House.
*This is not investment advice.
