From Nasdaq, Inc.:

Coinbase Global, the largest listed cryptocurrency exchange, could see a negative impact on its trading volume and margins if investors turn to bitcoin exchange-traded funds (ETFs) from the safety of cheap equity brokers. This has already caused Coinbase shares to drop by 13% in anticipation of the launch of spot bitcoin ETFs last week.

If spot bitcoin ETFs succeed, it would drive Coinbase customers toward equity brokers, as their low fees and regulated stock exchanges make it easier to invest in digital assets. CFRA Research downgraded Coinbase to “sell” from “hold”, believing that the exchange would retreat on its high trading fees. The success of ETFs will challenge high-cost crypto exchanges like Coinbase.

This trend comes as Coinbase struggles with lower trading volumes, which fell from $26 billion to $11 billion in the previous year. Despite these hardships, analysts believe that most investors who also want to engage with crypto assets beyond bitcoin will stay loyal to Coinbase. The platform also hopes to benefit from the spot ETFs by monetizing its custody fees charged for holding underlying bitcoins purchased from other crypto exchanges. However, the boost from custody fees may not be enough to offset the potential loss of investors to ETFs.



Read more: Low-cost spot bitcoin ETFs threaten to erode Coinbase margin, trading volume