Original Title: In Q2 Earnings, MSTR Surges, and Coinbase Stumbles. But What's Next?
Host: Steven Ehrlich, Chief Writer at Unchained
Guest: Owen Lau, Executive Director and Senior Analyst at Oppenheimer & Co's Equity Research Department
Podcast Date: August 2, 2025
Compiled by: Fairy, ChainCatcher
Editor's Note:
Coinbase is at a crossroads in a new era for the crypto industry: strong growth in stablecoin revenue, ambitious plans for the Base chain, rapid expansion of the derivatives market, and deep collaborations with traditional financial giants like JPMorgan and PNC.
On July 31, Coinbase released its Q2 earnings report, with a net profit of $1.43 billion, far exceeding the same period last year, but trading revenue fell 39% quarter-over-quarter. In this discussion, senior analyst Owen provides an in-depth analysis of the core drivers behind the earnings report, strategic layout, and market potential, offering frontline insights.
From the advancement of regulatory policies, controversies over FinTech data fees, to the wave of industry IPOs and accelerated mergers and acquisitions, the next six months in the crypto market will be unpredictable, with every step influencing the industry's direction. This is not only a critical moment for Coinbase but also a barometer for the entire crypto industry.
The following is the content of the conversation, compiled by ChainCatcher.
Steven: Coinbase released its earnings report, and the market had high expectations, but the reaction was quite poor. Can you explain what they announced and why the market reacted so negatively?
Owen: We had actually cautioned about being cautious with this earnings report. The data we track shows that Coinbase's trading volume fell by about 40% quarter-over-quarter in Q2. The first quarter performed well, but we had already anticipated a decline in the second quarter. The issue is that market expectations were still too optimistic, leading to inflated expectations.
This earnings report basically met our own expectations but was far below market consensus, causing the stock price to drop by about 16%.
However, there were no "danger signals" in the report itself. The main issue was the deteriorating macro environment in Q2, with rising risk aversion among investors, which naturally led to a decline in crypto trading.
Steven: Market demand is actually quite weak, just masked by the actions of some "large financial firms" raising billions to buy assets, which has little to do with retail enthusiasm. I've also tracked retail interest in assets like Bitcoin using Google Trends, and it has been quite sluggish, which is reflected in Coinbase's earnings report.
Owen: The impact of these factors on trading volume is actually difficult to gauge precisely. However, there have indeed been quite a few new corporate financial firms emerging in the first half of this year. This could be a positive, but we don't yet see a clear boost to trading volume.
Of course, if these companies use Coinbase for custody or trading, it will increase the platform's trading volume in the long run. Not just Coinbase, but the entire industry could benefit. But it's still too early; we need to continue observing the follow-up actions of these companies.
Steven: Coinbase executives, like Brian, Alicia, and Emily, have recently been pushing hard for subscription and service businesses, hoping to hedge against trading volatility, with a goal for this revenue to account for over 50% of total net revenue to stabilize earnings. However, the subscription business has also underperformed. What are your thoughts?
Owen: The company had already indicated that subscription revenue would slightly decline in Q2, so this isn't unexpected. The actual data was basically in line with expectations, sometimes even slightly higher.
Market disappointment mainly stems from Circle and its IPO, which led to overly high expectations regarding market capitalization and revenue from both parties. However, based on the guidance provided by management and the actual results, the overall performance was in line with expectations.
Looking at the Q3 guidance, subscription revenue is expected to grow by about 7% compared to Q2, indicating a moderate growth trend. This shows that the company's goals and growth drivers remain clear, such as increased market capitalization and adoption rates, especially with the widespread use of stablecoins. So I believe this narrative still holds.
Steven: When Circle released its S-1 filing, the community was shocked to find that Coinbase's earnings from USDC could be ten times that of Circle. The recently signed "Genius Act" has an unclear impact on USDC, but given that this is a major part of the business, what are your thoughts?
Owen: The key is that they expect stablecoin revenue to continue growing. Coinbase is actively promoting the adoption of USDC, such as through partnerships with Shopify and Nodo Clear, to expand its use cases in e-commerce and capital markets.
They hope that USDC can replace cash as collateral and even become a payment method for credit or debit cards in the future. I believe this is possible, but it requires time and infrastructure support.
Additionally, Coinbase and Circle have a roughly 50/50 revenue-sharing agreement, which is crucial for Coinbase's long-term profitability. So from this perspective, Coinbase's outlook remains strong.
Steven: Coinbase and Circle now have the opportunity to promote USDC applications in e-commerce and traditional finance, getting ahead of major banks like JPMorgan and Citigroup in this "open battlefield." What are your thoughts on the future competitive landscape and development of stablecoins?
Owen: I think we can categorize stablecoins into "exclusive brands" and "general-purpose" types, similar to the difference between exclusive credit cards and general credit cards.
Exclusive credit cards, like Macy's own card, can only be used at Macy's, but Macy's also accepts general cards like Visa or Mastercard. Similarly, the major banks like JPMorgan developing their own stablecoins is a good thing; they are building the infrastructure.
In the future, these exclusive stablecoins will coexist with general-purpose stablecoins like USDC and USDT, operating like different payment tracks together.
Steven: Coinbase has launched a new Base app; started tokenizing stocks; launched a local clearing system to supplement international business; and introduced regulated derivatives futures. Can you discuss the logic behind these new products as a whole? And how long until we see them generate substantial revenue?
Owen: Coinbase places great importance on this new Base App, which was officially launched about two weeks ago. Their goal is to create a "U.S. version of a super app" similar to WeChat. I personally look forward to it, as there isn't a product like this in the U.S. Currently, there are about 700,000 to 800,000 people on the waiting list, indicating that users are not just attracted by the airdrop, especially since the Base Token does not have a clear launch date yet.
This app can not only drive trading and custody revenue but also promote the use of USDC in payment scenarios. If successful, it would be a significant breakthrough for Coinbase.
As for the derivatives business you mentioned, it also performed very strongly in Q2. The notional trading volume in the international market has exceeded $1 trillion, and although its revenue share is still low, the trading volume is growing rapidly.
They are competing with top exchanges globally, and these new businesses indeed have the potential to become key pillars of Coinbase's profitability in the coming quarters or even years.
Steven: If Coinbase completes its $2.9 billion acquisition of Deribit, how significant will the impact be on this derivatives business?
Owen: The impact will be very significant. They have already launched perpetual contracts in the international market and plan to launch them in the U.S. soon. However, Coinbase has almost no presence in the options business, and one of the key reasons for acquiring Deribit is to fill this gap.
Additionally, this will help bring Deribit's technology to the U.S., with large-scale expansion expected as early as next year. The specific impact is still difficult to quantify, as financial details have not yet been disclosed; we will have to wait for Q3 to see the complete data, at which point I will provide an update.
Steven: Did they mention the activity level of the Base chain? I know on-chain activity is increasing, but is it contributing to revenue at this point?
Owen: We have been tracking this, and Base's activity in Q2 was slightly higher than in Q1. However, in terms of revenue, the contribution is still very small, likely less than 1% of total revenue, and it is still in the early stages. But looking ahead to the next 3 to 5 years, it has the potential to become very significant.
Steven: How important are the partnerships between JPMorgan, PNC Bank, and Coinbase?
Owen: The partnership between Coinbase and JPMorgan could become a template for future collaborations with other banks.
Currently, Coinbase acts more like a backend technology provider for these banks, without interfering with user experience, data, or branding. JPMorgan still controls everything, and Coinbase simply provides the underlying crypto technology.
This is one of the reasons we are optimistic about Coinbase; it is not just a trading platform but can also become the infrastructure for traditional finance.
Through JPMorgan, Coinbase can now reach about 80 million users. For example, users holding JPMorgan credit cards can now directly use their cards to buy crypto.
Secondly, they are integrating on-chain payments with traditional rewards systems. Users can now convert credit card points into USDC, and in the future, it may even support airline miles, cinema points, etc., which is a key breakthrough for driving cryptocurrency into mainstream consumption.
Users can now directly link their Chase bank accounts to Coinbase for a seamless buying experience, showing that the collaboration between the two has become very close and will continue to deepen in the future.
Steven: Please briefly discuss your outlook for the next six months, especially regarding the progress of market structure legislation (like the Clarity Act), and considering that Q4 is typically a strong period for the crypto market, what are your thoughts?
Owen: Overall, I have a few expectations:
- Increased regulatory clarity
I hope the Clarity Act can be implemented in September, which will clarify the classification of Bitcoin and Ethereum, and we may soon see legal definitions for altcoins like Cardano, Solana, and Doge.
- More companies going public or raising funds
With clearer regulations, we may see more crypto companies initiating IPOs or new rounds of financing.
- Accelerated industry mergers and acquisitions
Traditional financial institutions may enter the crypto industry through acquisitions, and smaller companies may merge to scale up.
As for Coinbase, I have a few additional points:
- The stock price decline is an expected adjustment and should not be over-interpreted.
- Trading volume is recovering, and Q3 SNS revenue is expected to grow.
- The Deribit acquisition has not yet been reflected in the earnings report, and it may become a new growth point in the future.
- Coinbase's finances are solid, with the ability to continue expanding (whether through internal growth or acquisitions).
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