Analyst Warned for the Cryptocurrency Market: “Due to Coinbase Data…”

Bitcoin It hovered around $73,000, approaching its all-time high.

However, beneath the headline rally, retail traders have largely remained on the sidelines, and this shift in trading dynamics has had a noticeable impact on Coinbase’s performance.

Coinbase reported weaker-than-expected revenue in the third quarter, pointing to a decline in retail trading as a key factor. “This year in particular, there was a lot of negative sentiment that probably deterred traders,” said Adam Morgan McCarthy, an analyst at data firm Kaiko.

Despite the recent Bitcoin rally, Coinbase predicts difficulties ahead due to fluctuating crypto prices in October. The company estimates fourth-quarter revenue from its subscriptions and services division, a segment aimed at individual users, to be between $505 million and $580 million. This outlook is attributed to a 10% price decline on Ethereum in October compared to third-quarter averages, as well as low interest rates, following a 7% quarterly revenue decline in this unit.

The cautious forecast and disappointing earnings report sent Coinbase’s shares down 9% in the New York market. According to Coinbase, low volatility and falling crypto prices have contributed to the decline in retail participation on the platform. According to data from Volmex, volatility for Bitcoin in particular has decreased significantly by 40% from 2020 to September due to the influence of larger institutional investors and the arrival of spot crypto ETFs.

Morgan McCarthy noted that major sell-off events such as liquidations by the German government and bankrupt crypto firms like Mt Gox have further fueled the downward trend. The individual slowdown isn’t limited to Coinbase; As the price of Bitcoin rose, PayPal also managed to run transactions for its customers from the second quarter to the third quarter. crypto para reported an 11% decline in assets.

Much of the current market activity is driven by institutional investors. CryptoQuant’s research reveals that demand for Bitcoin spot ETFs among large investors, known as “whales,” was twice as much as individual interest last year.

However, there are also some positive signs. “We have seen volumes return somewhat,” said Morgan McCarthy, noting that Bitcoin volumes on Coinbase increased faster than on Binance, indicating that individual interest may be reviving.

*This is not investment advice.