The 2024 U.S. presidential election has drawn attention to cryptocurrencies, positively impacting Coinbase. The growth in trading volumes and institutional investors is driving the company's development, but the decline in retail trader activity poses long-term challenges.
Impact of Elections on Coinbase
Donald Trump's victory in the November 2024 election reignited interest in cryptocurrencies, leading to a significant increase in trading volumes on major exchanges. Coinbase has particularly benefited from this dynamic. According to a recent report by Kaiko, weekly trading volumes on the platform reached their highest level in two years in the fourth quarter of 2024, mainly due to the influx of institutional investors. Coinbase's stock has risen by about 40% since this victory, a trend that may be reflected in the company's upcoming quarterly earnings report scheduled for February 13, 2025.
Facing Challenges
Despite this increase, the participation of retail traders, who generate the highest fees, has remained modest. Their share of total volume dropped from 40% in 2021 to only 18% in 2024. In response to this situation, Coinbase expanded its offerings to include services such as blockchain rewards, custody fees, and interest generated by USDC. These subscriptions and crypto services account for a growing share of its total revenue. However, these revenue sources remain closely linked to overall crypto market activity. For example, in the third quarter of 2024, Coinbase’s revenues from blockchain rewards decreased by 16%, primarily due to falling prices of Ether (ETH) and Solana (SOL).
Future Prospects
Thus, Coinbase finds itself at a strategic turning point, driven by the momentum of institutional investors but hindered by the decline of retail traders. The election of Donald Trump certainly rekindled optimism in the crypto market, but the platform must innovate and adapt to regulatory changes to ensure its long-term growth.
Coinbase has gained significant momentum following Donald Trump's victory, yet the company faces important tasks related to growth and adaptation to changing market conditions.
