Amid the cooling of the cryptocurrency market, Coinbase’s revenue for the fourth quarter declined by 20%, with a net loss exceeding $600 million.

Impacted by the cooling of the cryptocurrency market, Coinbase $Coinbase (COIN.US)$ reported a staggering net loss of $667 million in Q4.

After the US stock market closed on February 12, Coinbase released its Q4 earnings report showing a 20% drop in revenue to $1.8 billion, which exceeded market expectations in terms of decline. The quarter recorded a net loss of $667 million, compared to a net profit of $1.3 billion in the same period last year. The financial report pointed out that the losses were mainly due to provisions for impairment on unrealized losses from cryptocurrency holdings and investments. In contrast to the weak quarterly financial performance, Coinbase still emphasized a narrative of ‘scale and diversification’ regarding its operating metrics for 2025.

Total trading volume for the full year reached $5.2 trillion (a year-on-year increase of 156%), with its share of cryptocurrency trading volume rising to 6.4% (doubling year-on-year). Subscription and service revenues, regarded by management as the ‘ballast for navigating cycles,’ hit a record high of $2.8 billion, supported by USDC-related income and membership subscriptions as key pillars.

Mizuho analyst Dan Dolev noted that while Coinbase’s institutional business performed strongly, its consumer segment was weak. The company’s first-quarter revenue forecast fell below consensus, and its EBITDA missed expectations. The market is closely watching whether this is a ‘mid-cycle correction’ or the start of a new ‘crypto winter.’

Despite the earnings report falling short of expectations, the company’s stock price rose slightly in after-hours trading, but its cumulative decline since the beginning of the year still exceeds 40%.

This decline in performance reflects the common challenges faced by the entire cryptocurrency exchange industry. Last week, competitor Gemini Space Station announced plans to cut up to 25% of its workforce and scale back international operations. This week, Robinhood also reported a 38% drop in cryptocurrency trading revenue.

Trading Revenue Under Pressure, Derivatives Business Becomes New Growth Pole

Affected by the overall weakening of the cryptocurrency market in the fourth quarter, Coinbase’s core trading revenue experienced a decline.

The company’s Q4 trading revenue was $983 million, down 6% quarter-over-quarter. Consumer trading revenue plummeted 13% to $734 million. The earnings report indicated that an increasing proportion of trading volume came from Coinbase One paid subscribers who enjoy preferential fee rates.

Benchmark analyst Mark Palmer stated:

An overreliance on retail trading is not the future Coinbase desires, especially as trading fees may gradually approach zero, akin to traditional brokerage firms.

Nonetheless, CFO Haas remains optimistic about the retail outlook:

Retail investors are buying the dip, and importantly, their financial health remains strong.

By contrast, institutional business performance has been remarkable. Despite a 13% month-over-month decline in institutional spot trading volume, trading revenue from institutions grew against the trend by 37% month-over-month to $185 million, driven by optimized fee structures and robust growth in derivatives operations.

Particularly after completing the acquisition of Deribit, Coinbase has further solidified its leadership position in the global cryptocurrency derivatives market. Data shows that Coinbase’s market share in the U.S. derivatives market surged fourfold year-over-year, with Q4 derivatives trading volume hitting a record high.

Subscription services act as a stabilizing force, driving growth in the USDC stablecoin ecosystem.

If trading operations represent Coinbase’s ‘offensive spear,’ subscription and service revenues serve as its ‘defensive shield.’

In 2025, subscription and service revenues reached $2.8 billion, marking a 23% year-over-year increase. Stablecoin revenues emerged as the standout highlight, contributing $364 million in Q4 alone. This was primarily due to an 18% quarter-over-quarter surge in the average balance of USDC held on the platform, reaching a record high of $17.8 billion.

Coinbase is positioning USDC as a ‘hard currency’ within the on-chain economy by deepening its collaboration with Circle and promoting the Base chain. The earnings report noted that Coinbase stores approximately 12% of the world’s crypto assets, with platform assets growing threefold over the past three years.

In addition, the number of subscribers to Coinbase One, the paid membership service, has approached the one million mark. These highly engaged users not only contribute stable subscription fees but also increase the platform’s fund retention through products such as the Coinbase Card.

Notably, the draft stablecoin legislation being advanced in the United States may restrict exchanges from offering rewards tied to users’ stablecoin balances. This change will directly impact the revenue-sharing arrangements between Coinbase and Circle. CFO Haas stated:

We are at the negotiating table and will remain there until an agreement is reached.

Analysts generally believe that this portion of revenue is more profitable and predictable, serving as a critical buffer against trading volume fluctuations. If legislation limits this revenue stream, it will weaken one of the core pillars of the company’s diversification strategy.

Planning for the Future: Rigid Growth on the Cost Side

To support its ambition of becoming the ‘exchange for everything,’ Coinbase has not been sparing in its expenditures.

Operating expenses for the full year of 2025 surged by 35% to USD 5.7 billion. Specifically, in the fourth quarter, total operating expenses increased by 9% quarter-over-quarter to USD 1.5 billion. Among these, combined expenses for research and development, administration, and marketing grew by 14%.

The growth in expenses was primarily driven by three factors:

• First, as holdings of USDC increased, reward payouts to users rose significantly;

• Second, acquisition-related costs and amortization resulting from the purchase of companies such as Deribit;

• Thirdly, there is the investment in global compliance and legal affairs.

Despite the high costs, Coinbase emphasized that this is to capture the market dividend after regulatory clarity. The company’s number of full-time employees increased by 3% quarter-over-quarter to 4,951 in the fourth quarter, mainly concentrated in customer service and product teams, indicating an expansion trend.

Outlook for Q1: Cautiously Optimistic

For the first quarter of 2026, Coinbase provided a relatively cautious earnings guidance.

As of February 10, 2026, the company had generated approximately $420 million in transaction revenue. However, subscription service revenue for Q1 is expected to be between $550 million and $630 million, lower than the Q4 level, primarily due to reduced interest income caused by declining interest rates and decreased staking rewards resulting from falling cryptocurrency prices.

To hedge against potential earnings volatility and reward shareholders, Coinbase has implemented a significant share repurchase plan.

Following the repurchase of $850 million worth of shares in Q4, the company bought back another $895 million worth of shares between early 2026 and February 10. With the board’s newly approved $2 billion repurchase authorization, Coinbase currently has approximately $2.3 billion in repurchase capacity remaining.

Analysts believe that this aggressive capital allocation strategy provides support for the stock price in a volatile market. Regarding the recent contraction in the cryptocurrency market, research firm Kaiko stated that the market is currently at a ‘mid-bear phase.’ However, Clear Street analyst Owen Lau opined:

The price movement and trading volume resemble a mid-cycle correction rather than a complete collapse.

For Coinbase, the short-term downturn in the cryptocurrency market will validate the effectiveness of its diversification strategy. However, a prolonged bear market would once again expose the reality that the exchange’s revenues cannot fully escape market cycles.

Editor/Rice