Morning Minute: Coinbase wipes out Q3 gains despite sideways crypto market

Morning Minute is a daily newsletter written by Tyler Warner. The analyzes and opinions expressed are his own and do not necessarily reflect those of Decrypt. Subscribe to the Morning Minute on Substack.

GM!

Today’s most important news:

• Crypto majors fall 2-3% after Powell says December rate cut not certain
• US Senator Claims Binance Helped Launch TRUMP for CZ Pardon
• Coinbase crushes profits with $1.9 billion in revenue; Armstrong toys with mention markets
• MSTR beats earnings with a profit of $2.8 billion and owns 640,808 BTC
• Token Works announces REKTSTR as the first ERC20 strategy

📈 Coinbase crushes profits in Q3, transaction revenue soars

Crypto exchange Coin base crushed third-quarter earnings.

And now he notices that he is performing better Bitcoin by 2025.

📌What happened

Coinbase announced its Q3 results yesterday after the market closed, beating expectations.

Key Takeaways:

• Turnover of $1.9 billion (~55% year-over-year), exceeding consensus by approximately $200 million
• Net income $433 million (477% annualized)
• Transaction revenue reached the top $1 billion (+83% YoY)a demographic shift driven by institutional flows and high-frequency trading
• The number of monthly transaction users (MTUs) came in at 12.6 millionexceeding expectations and reversing the previous quarter’s decline
• Base Layer (the company’s Layer-2 chain). positive adjusted EBITDA for the first time
• Forward Guidance: Coinbase projects fourth-quarter revenue in the $2.2 billion – $2.3 billion range, assuming average daily trading volume in the $300 billion range and modest crypto price tailwinds.

Coinbase also bought ~$300 million worth of Bitcoin in the third quarter.

🗣️What they say

“We are accelerating payments through the adoption of stablecoins, which we expect will continue given policy tailwinds and continued adoption by financial institutions and businesses for payment and treasury needs.” – Coinbase shareholder letter

🧠Why it matters

Coinbase has a number of factors in its favor right now: volatility, institutional demand, stablecoin adoption, and favorable regulatory shifts.

Extension to this:

• Increased volatility in digital assets in July and strong institutional interest contributed to the increase in transaction revenues
• They see the increasing importance of stablecoins for payments and sovereign bond usage, and say they anticipate continued growth in stablecoin adoption, supported by ‘policy tailwinds’ and institutional/corporate demand
• Trading volumes and revenues benefited from a crypto rally linked to both macro developments and favorable regulatory shifts.

Additionally, their L2 base continues to shine and generate significant revenue for the company.

It’s a strong combination.

And they’ll need it as more and more major banks and institutions get into the crypto game (custody, trading and more).

But that may be changing for the worse for Coinbase as their crypto-as-a-service offering starts to take off.

The stronger Coinbase is, the more attractive COIN stock becomes compared to crypto majors (even Bitcoin).

Many who are just exploring the space will be attracted to the revenue and fundamentals that COIN provides). And it has outperformed Bitcoin YTD.

If this trend continues, expect more capitulation from crypto tokens and into the picks and shovels (COIN stocks).

🌎 Macrocrypto and memes

A few Crypto and Web3 headlines that caught my attention:

• Crypto majors are down 1-3% after a big post-FOMC dip yesterday; BTC -3% at $110,100, ETH -3% at $3,900, BNB +1% at $1,120, SOL -2% at $192
• ZEC (+2%) and AERO (+2%) were the leaders
• 870M+ was liquidated from the crypto market yesterday after Bitcoin’s dip to $106,000, causing many alts to drop 5-10%+
• Senator Chris Murphy has claimed that Binance helped coordinate the launch of the Trump memecoin in exchange for a pardon from CZ (also mentioned on the WSJ)
• Coinbase Q3 beat revenue by ~$1.9 billion, transaction revenue exceeded $1 billion
• Coinbase CEO Brian Armstrong also mentioned several keywords of prediction markets over market listings, raising concerns about market integrity
• Strategy (MicroStrategy) Q3 reported ~$2.8 billion profit in Q3 despite softer BTC; treasury >$68 billion BTC (640,808 BTC)
• Drake and Adin Ross were sued, with the class action lawsuit being filed over misleading promos for crypto casino Stake
• Western Union applied to trademark WUUSD for its stablecoin

In corporate bonds/ETFs

In Memes

• Memecoin Leaders are usually red; DOGE -2%, Shiba -1%, PEPE -3%, PENGU -8%, BONK -2%, TRUMP -1%, SPX -7% and FARTCOIN -7%
• LAB (+80%), pippin (+69%) and jelly jelly (+23%) were the leaders in the meme move; MACHINES +88x leading top runners

💰 Token, airdrop and protocol tracker

Here’s an overview of the top token, protocol and airdrop news of the day:

🚚 What’s happening in NFTs?

Here is the list of other notable headlines of the day in NFTs: