Coinbase Faces First-Quarter Profit Squeeze as Crypto Trading Slumps
Wall Street analysts are trimming forecasts for Coinbase and other crypto platforms after a sharp drop in crypto trading activity and token prices, setting up a likely first-quarter earnings profit squeeze. Coinbase is being hit hardest by the revenue mechanics of exchanges: lower volumes mean lower transaction fees.
Barclays downgraded Coinbase and warned global crypto trading activity is at levels not seen since late 2023. Barclays estimates Coinbase’s March trading volume was the lowest since Sept 2024, with April showing no improvement, and projects first-quarter volumes down about 30% quarter over quarter. It also expects adjusted EBITDA to land roughly 24% below Street estimates, largely tied to weaker spot trading and retail participation.
Oppenheimer also cut estimates but remains comparatively more optimistic. It lowered its Coinbase volume estimate to about $211 billion for the quarter (from $244 billion) and expects total revenue around $1.48 billion, reflecting softer crypto prices and continued uncertainty; it notes earlier Wall Street models had not fully captured the volume decline.
Beyond Coinbase, the reset is spilling across the sector. Oppenheimer said Circle continues expanding USDC, with USDC transfer volume up about 12% quarter over quarter and stablecoin market cap up about 1%. Still, stablecoin growth is not expected to fully offset weaker core trading. Stablecoin rewards remain politically and regulator-dependent.
Key dates: Coinbase reports second-quarter earnings on May 7. Bullish reports April 23. Circle has not announced a date.
Bearish
This news is bearish for crypto traders because it signals a broad, fee-driven earnings risk tied to weaker spot activity and lower retail participation—exactly the type of catalyst that historically pressures exchange-related sentiment and can spill over into overall risk appetite.
Coinbase relies heavily on trading fees, so a ~30% quarter-over-quarter volume decline (per Barclays) plus weaker token prices (BTC down 22% and ETH down 29% in Q1) creates a direct earnings “profit squeeze” narrative. When Street firms preemptively cut estimates ahead of earnings season, it often leads to (1) lower near-term positioning by traders and (2) volatility around earnings—because expectations are reset before results hit.
Stablecoins provide partial offset (USDC transfer volume up ~12% QoQ), but the article frames it as secondary to core trading slowdown. That matters: if the market continues to stay quiet, even diversification into derivatives/tokenized assets may take time to compensate.
Historically, when analysts downgrade exchange platforms due to trading-volume compression (seen in prior market cool-down phases), crypto prices often struggle to sustain rallies short-term, while longer-term recovery usually requires either a renewed trading catalyst (price volatility/liquidity) or clearer regulatory/monetization pathways for stablecoins.