As a crypto brokerage, Coinbase (NASDAQ:COIN) has a different business model from companies like Microstrategy (NASDAQ:MSTR) that relies heavily on Bitcoin’s price performance due to its asset reserve strategy.
Coinbase benefits from cryptocurrency transactions regardless of whether users profit or lose. And during this Bitcoin bull run, Coinbase will certainly see higher revenue eventually from the hype.
Bitcoin’s system has this halving event that reduce the mining rewards to ensure a controlled supply and reduce inflation to keep it valuable. And every halving event, which happens every four years, will always be followed by a Bitcoin rally with other alternative coins follow the uptrend in the next year.
The last Bitcoin halving event took place on April 19, 2024 and the block reward was reduced to 3.125 Bitcoin per block. And this time is no different with the previous halvings, the Bitcoin bull leads all the crypto market to a roller coaster fun.
The increased trading activity resulted in a surge in Coinbase’s revenue as the platform earns a commission on every transaction, regardless user’s profit or loss. As predicted, the company reported an 88.46% year-over year increase of total revenue of $5.24 billion in 2024!
Coinbase has created revenue streams at full spectrum of crypto businesses not only from quoting trading fees but also staking and DeFi products that attracted a broader range of users from retail to institutional investors.
One year after halving event is crucial as the money pumped into the entire crypto market. This time, the Bitcoin bull gets steroid to run even crazier by the support from President Trump creating a favorable regulatory environment for the whole ecosystem of cryptocurrency.
Coinbase shall see higher revenue from the support of its industry and boosted by favorable support from the current administration.
In my personal opinion, Coinbase has the fundamental to thrive more than Microstrategy. Microstrategy’s main business doesn’t make significant revenue. And by relying heavily on Bitcoin, it faces substantial risk; once the price crashes (and it already happened many times before, dropping 90% in one night after a 1000% rally in a year prior), the downfall of the crypto king will drag Microstrategy to the grave.
On the other hand, Coinbase is less affected by Bitcoin price fluctuations. As long as trading volumes remain high, whether through sell or buy transaction, it will continue make money from the trading fees.
This article first appeared on GuruFocus.