Before Coinbase (NASDAQ:COIN) reported its most recent quarterly earnings, the analyst consensus was rather grim with an average estimate predicting a loss in Q4 2023. 

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John Todaro of Needham & Co and Owen Lau of Oppenheimer & Co must have felt very lonely, being in the minority of analysts expecting the biggest US crypto exchange to post net income of up to $103 million, as was reported by Bloomberg. When the numbers came out they beat the most optimistic analyst’s estimate by a factor of 2.65 with net income recorded at $273 million or $1.04 per share. How could the reputable Wall Street analysts get it so wrong so overwhelmingly? Remaining skeptical of the company profitability prospects, Kenneth Worthingon of J.P.Morgan even wrote in his post-earnings note rather bitterly 

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“Given the media attention and market anticipation for spot Bitcoin ETFs especially considering Coinbase’s direct participation and monetization efforts, we were hoping management would have provided more robust insight into the economics of the arrangements with issuers.”

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Unlike Mr. Worthington, we at Elementus were not caught off guard by Coinbase’s blowout Q4 performance, thanks to the new Sonar platform exposing Elementus proprietary blockchain data insights to even non-technical users. If those analysts who missed the mark on Coinbase earnings had been using Sonar, the signs of things to come were abundant. 

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In this post we are going to walk you through some charts with blockchain data insights pointing to a lot of clear signs of Coinbase's improved performance in the last quarter of 2023.

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Let’s start with a high level view of the digital asset markets. It is a well known fact that total stablecoin market capitalization and on-chain volume are good indicators of the interest in crypto as an asset class. On top of that, a significant chunk of Coinbase revenues comes from minting USDC stablecoin since reserve deposits generate interest revenue for the company.

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After declining throughout 2023 both the supply of stablecoins and the on-chain volumes have increased dramatically in Q4, exposing the renewed interest of investors in crypto, which virtually guaranteed a boost to Coinbase bottom line.

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Now let’s examine the on-chain data representing performance of Coinbase core exchange platform in 2023.

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While Coinbase on-chain transaction volumes have stagnated for the good part of the year, with the exchange even losing share of BTC inflows to Binance by the end of Q2, we see a clear pickup trend in Q4. It was CZ’s recent troubles with regulators that likely led to Coinbase recovering market share by the end of 2023 at the expense of Binance, which came under the US Government crackdown. 

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Finally, let’s look at the on-chain history of other Coinbase businesses such as Coinbase Custody and Coinbase Prime/OTC, which gained new prominence as Bitcoin ETF approval appeared closer than ever after BlackRock unveiled its SEC application in June 2023.

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We see a significant increase of Coinbase Custody BTC balance in the aftermath of the BlackRock ETF application filing, reaching its climax in Q4, which must have translated into higher custody fees even before the approval of spot ETFs in January 2024 (keep in mind that majority of the ETFs ended up selecting Coinbase as their custodian).

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However, the sweetest handout from SEC came to Coinbase Prime thanks to the agency’s insistence on making Bitcoin ETFs cash settled. That particular choice of ETF structure made the fund flows more complicated and expensive because creations and redemptions couldn’t be processed in-kind. The ETF sponsors were forced to buy and sell Bitcoin via OTC desks, with Coinbase Prime becoming a top beneficiary of that SEC ruling. This is evident from the Elementus Sonar chart published by Bloomberg where BTC transaction volume of Coinbase Prime is seen skyrocketing into the ETF launch. Especially sweet must be the Grayscale Bitcoin Trust (NYSE:GBTC) outflows, 100% of which appear to be sold through Coinbase Prime. We are talking about billions of dollars worth of Bitcoin sold and bought that is guaranteed to generate very lucrative institutional trading fees for Coinbase.

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Coinbase's Q4 performance surprised many, but at Elementus, we saw the signs coming through the power of blockchain data analysis. Our Sonar platform empowers users of all technical backgrounds to unlock valuable insights hidden within on-chain activity. By utilizing these insights, we were able to identify trends in stablecoin usage, exchange transaction volume, and custody & prime activity, all of which pointed towards Coinbase's improved performance.


This exemplifies the potential of blockchain data for financial institutions. By leveraging platforms like Sonar, you can gain a competitive edge by uncovering hidden opportunities, making data-driven decisions, and staying ahead of the curve in the ever-evolving crypto landscape.

Ready to unlock the power of blockchain data for your institution? Contact us today to learn more about Elementus and the Sonar platform.