Fee reduction to fend off competition on watch
Back in February this year, Coinbase has announced fee reduction for high-volume traders to step up against its competitors and to boost its institutional business. High-volume traders can now get upgraded to lower fee tiers by providing proof of over $500,000 in monthly trading volume on other crypto exchanges.
In 4Q 2023, its institutional business represents 8% of Coinbase’s transaction revenue and institutional trading volume were up 92% quarter-on-quarter.
The upcoming 1Q results will offer a glimpse of any success in its fee-reduction move in terms of increasing its market share and whether the recovery momentum in its institutional trading volume can continue.
Subscription and Services Revenue to remain stable
For 1Q 2024, its subscription and services revenue, which accounts for 45% of its business, is expected to grow 21% from a year ago. Higher crypto asset prices may have a positive impact on its blockchain rewards revenue and custodial fee revenue, while higher average custodial fiat balances may support growth in interest income.
This may help to underpin the steady growth momentum for this segment, while eyes will be on several new products, such as Coinbase One, Prime Financing products and Coinbase Cloud, to see if they can gain traction.
Technical analysis – Coinbase’s share price back to retest Ichimoku Cloud support
Coinbase’s share price has retraced as much as 27% from its March 2024 peak, but is attempting to stabilize lately at the upper edge of its daily Ichimoku Cloud support around the US$220.00 level. For now, a downward trendline resistance may still be in the way, which will require buyers to break above the US$250.00 level in order to signal greater control. Its daily relative strength index (RSI) is hovering back at its key 50 level for now, which points to a more neutral balance.
On the downside, failure for share price to sustain above the US$220.00 level may pave the way to retest the US$188.00-$200.00 level next, where the lower edge of the cloud support stands.
