Bitcoin News Today: Coinbase's $1B Bitcoin Loans: Betting on Stability as Profits and Prices Swing

Coinbase Reaches $1 Billion in Bitcoin-Backed Loans as Earnings and Market Conditions Loom

Coinbase Global Inc. (COIN) has secured $1 billion in Bitcoin-backed loans, a strategic move to bolster liquidity as the crypto exchange prepares to report third-quarter earnings on October 30. The loans, which leverage the company's growing stablecoin operations and blockchain infrastructure, reflect Coinbase's pivot toward diversified revenue streams amid a volatile market environment, according to a Benzinga preview. The firm's CEO, Brian Armstrong, has emphasized the importance of structured financial tools in stabilizing the business, particularly as the company navigates declining transaction revenue and rising competition in the U.S. market, noted in a Crypto.news article.

The upcoming earnings report is expected to highlight mixed signals for Coinbase. Analysts project the company will post revenue of $1.8 billion in Q3, a 49% year-over-year increase driven by its acquisition of Deribit and robust performance in stablecoin yields, according to a Yahoo Finance roundup. However, profitability remains under scrutiny. While net income in Q2 reached $1.4 billion, much of this was attributed to an unrealized investment gain in Circle, the issuer of USD Coin (USDC). Excluding such gains, net income fell to $33 million, underscoring the need for sustainable revenue growth, the Crypto.news article noted.

Market conditions have further complicated Coinbase's outlook. The Federal Reserve's 25-basis-point rate cut on October 29 triggered a sharp selloff in Bitcoin, with the cryptocurrency dropping below $108,000. This volatility led to over $100 million in crypto liquidations, including $55 million tied to Bitcoin, as traders adopted defensive positions ahead of the central bank's policy announcement, according to a Yahoo Finance story. Analysts warn that Bitcoin's range-bound behavior could pressure Coinbase's trading volume, a key metric for its transaction-based revenue.

Despite these headwinds, Wall Street remains divided on Coinbase's long-term prospects. J.P. Morgan analyst Kenneth Worthington upgraded the stock to "Overweight," citing potential value creation from a proposed Base token and expanded USDC subscription models. He estimates the token could add $14 to $42 per share in equity value if launched, the Yahoo Finance roundup said. Conversely, Compass Point's Ed Engel maintains a "Sell" rating, arguing that Coinbase's shift to lower-margin subscription services and staking payouts threatens profitability, according to a Seeking Alpha preview.

The broader financial sector is also showing renewed interest in digital assets as collateral. Fleet Asset Management Group reported that major institutions are exploring blockchain-based lending structures, signaling a shift toward integrating crypto into traditional finance, in a Record-Courier release. This trend aligns with Coinbase's strategic acquisitions, including Echo and Deribit, which aim to diversify offerings for institutional and retail clients, the Benzinga preview noted.

Coinbase's shares, down 2.22% to $347.32 on Wednesday, have risen 36% year-to-date amid a broader crypto bull market, the Benzinga preview added. However, analysts caution that weak Q2 performance—marked by 39% declines in transaction revenue and 6% drops in subscription income—could persist if trading volume remains subdued, the Seeking Alpha preview warned. The company's ability to capitalize on stablecoin yields and regulatory progress in the U.S. will likely determine its trajectory in the coming quarters.