Low-cost spot bitcoin ETFs threaten to erode Coinbase margin, trading volume
trading volume and margin, analysts said, if more investors dabble in bitcoin from the safety of cheap exchange trade funds tracking its spot price.
It will also impact Coinbase's trading commissions and spreads — the difference between the bid and ask price, J.P. Morgan analyst Kenneth Worthington said.
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Offering CollegeCourseWebsiteIIM KozhikodeIIMK Advanced Data Science For ManagersVisitMITMIT Technology Leadership and InnovationVisitIndian School of BusinessISB Digital TransformationVisit The brokerage warned that if spot bitcoin ETFs succeed, it will push potential Coinbase customers into the hands of equity brokers.
The lower-than-average fee charged by ETF issuers and the ease of gaining exposure to the digital asset through regulated stock exchanges could attract new investors.
Since the new financial instrument arrived in the U.S. stock markets last week, shares of Coinbase have dropped nearly 13%, compared to a 7.5% slide in bitcoin, which is still up nearly 60% since September end in anticipation of ETFs.
CFRA Research downgraded Coinbase to «sell» from «hold», saying the exchange could be forced to cut its trading fees to remain competitive with low-cost ETFs.
The ease of accessing spot bitcoin ETFs via stock brokers such as Robinhood that charge very low commissions was also likely to pressure Coinbase margins.
«This is likely to reset the bar lower for pure-play, over earning crypto exchanges like Coinbase,» Mizuho analyst Dan Dolev said.
A Coinbase spokesperson said the company currently has no plans to reduce transaction fee and expects to benefit from a broader adoption of the world's largest cryptocurrency.
Investors have poured $1.9
