Trump's Win Boosts Coinbase Trading Volumes, Shares Surge 40%

The cryptocurrency exchange Coinbase has witnessed a significant surge in trading volumes during the fourth quarter of 2024, according to a report by cryptocurrency researcher Kaiko. This surge, which has reached levels not seen in two years, is largely attributed to the pro-crypto stance of US President Donald Trump following his election win in November.

The increased trading volumes, which have primarily come from institutional investors, have been a bullish indicator for Coinbase's upcoming quarterly earnings report, scheduled for February 13. Since Trump's election win, shares of Coinbase's stock, COIN, have risen by approximately 40%.

However, the exchange has been grappling with a decline in retail investor activity, with retail traders' share of volume shrinking to just 18%, down from 40% in 2021. This has had a negative impact on Coinbase's revenue, despite the exchange's efforts to diversify its income streams beyond trading.

In 2024, Coinbase significantly increased revenues from subscriptions and services. However, trading still accounts for more than 50% of the exchange's revenue, and subscriptions and services are inherently tied to activity in the underlying crypto market, offering limited protection against market drawdowns and trading lulls.

The resurgence in trading volumes reflects renewed enthusiasm for crypto as an asset class following Trump's election win. Trump has pledged to make America "the world's crypto capital," and his victory sparked a surge of interest in crypto, with Galaxy Digital, a cryptocurrency trading firm, clocking the biggest trading day of the year on November 5.

Coinbase, which supported Trump during the presidential race, is particularly well-positioned to benefit from the election results. The incoming Trump administration is expected to be more favorable to the cryptocurrency industry, which could lead to less regulatory pressure for Coinbase's staking business. Coinbase operates the second-largest Ether (ETH) staking business after Lido, a decentralized finance (DeFi) protocol, and saw a net outflow of nearly 1.3 million ETH in Q4, according to Kaiko.