Traders on Polymarket have assigned a mere 22% probability that Coinbase Global, Inc. (NASDAQ: COIN) will surpass Wall Street’s earnings expectations in its fourth-quarter report, set to be released today. The contract, which tracks the likelihood of Coinbase exceeding the consensus estimate of $0.61 in GAAP earnings per share (EPS), has drawn over $50,000 in trading volume. In contrast, a staggering 78% of participants anticipate a miss, reflecting widespread skepticism amid the recent cryptocurrency market turmoil.
The distress signals in the crypto space are hard to ignore; Bitcoin has plummeted nearly 50% since its October peak, while Ethereum and XRP have also faced significant declines of 33% and 25%, respectively. Analysts are predicting that Coinbase will disclose revenue of approximately $1.84 billion, a sharp drop from the $2.27 billion it reported a year earlier. Furthermore, transaction revenue is expected to hit just $1.03 billion, representing a hefty year-over-year decline of 33.6%.
As trading fees remain the cornerstone of Coinbase’s profitability, the drastic reduction in trading volumes for major cryptocurrencies like Bitcoin and Ethereum indicates a potential depletion of this crucial revenue source. Investors are keenly aware that CEO Brian Armstrong may pivot attention toward the growth of subscription and services revenue, which reportedly saw a 9% quarter-over-quarter increase to $698 million in Q3.
Current market conditions paint a bleak picture for Coinbase. Following testimony from Treasury Secretary Scott Bessent before Congress, which declared the Treasury’s lack of authority to stabilize crypto markets, sentiment has soured even further. Bessent’s comments have struck fear into industry players, ruling out government intervention as a potential safety net.
Matthew Sigel, head of digital asset research at VanEck, has pointed to multiple factors squeezing Bitcoin’s value: the collapse of futures open interest from $61 billion to $49 billion as leverage unwound, miners rushing to sell Bitcoin to sustain operations amidst lackluster AI-related ventures, and growing apprehensions regarding encryption vulnerabilities fueled by advancements in quantum computing.
In contrast to the cryptocurrency sector’s decline, traditional stocks and precious metals have reached all-time highs, undermining the narrative of crypto as a safe haven asset. Coinbase’s stock is currently priced at around $152.16, down 37% year-to-date, and trading at a P/E ratio of about 26, leaving limited margin for error in today’s report. Should Polymarket’s odds hold true and Coinbase fail to meet the reduced EPS benchmark, further declines in stock value could loom large.
Historically, Coinbase has outperformed earnings estimates in seven of the last ten quarters, but with the crypto market’s dramatic downturn and signs of retail trader capitulation, this quarter may mark a significant inflection point for the platform. As traders await Coinbase’s after-market report, the feelings of uncertainty will continue to loom large over the crypto landscape.
