Simply put
- Coinbase outperformed expectations in the third quarter, bringing in $1.9 billion in revenue. This growth was fueled by a surge in trading volumes and profitable services like Ethereum L2 Base.
- The BlackRock Bitcoin ETF, known as IBIT, experienced substantial outflows of $290.8 million on Thursday as Bitcoin dipped below $110,000. However, overall inflows remained strong at $88 billion.
- REX Shares introduced a new ETF called ULTI, which focuses on volatile stocks, including crypto firms like Core Scientific and Gemini, in hopes of generating weekly income from price fluctuations.
Public Key serves as a weekly overview. This week highlights Coinbase’s weaker Q3 forecasts, sharp declines in BlackRock’s IBIT, and REX Shares’ new ETF that leverages volatility in crypto stocks.
Coinbase volatility tailwind
Coinbase surpassed expectations in its earnings report on Thursday, noting a third-quarter revenue of about $1.9 billion, with transaction revenue hitting $1 billion. This represents a significant rebound as spot trading volumes have returned to exchanges.
The company indicated a solid start to the fourth quarter, having already generated $385 million in trading revenue for October. In addition to trading, Coinbase has benefited from increased subscriptions and services like staking, custody, and competitive interest rates. Interestingly, its Ethereum L2, Base, is now profitable.
Coinbase trades on the Nasdaq market under the ticker COIN, which ended Friday up 4.65%. Yet, it’s still about 3% lower compared to the start of the week.
This earnings report underscores how volatility and trading volume can significantly influence COIN’s returns, although it can be quite challenging for traders.
To enhance its appeal, Coinbase has made more assets accessible to investors. According to CEO Brian Armstrong, they’re expanding from “about 300 assets to over 40,000 assets in the U.S.” with the DEX integration. Notably, the quarter saw the introduction of “CFTC-regulated 24/7 perpetual-style futures in the U.S.”
There’s an ongoing debate in the trading community about the risks posed by certain assets, with a mix of enthusiasm and caution from industry experts.
IBIT traders are scared
Regarding volatility, financial institutions withdrew money from Bitcoin ETFs after BTC fell below $110,000 on Thursday.
BlackRock’s iShares Bitcoin Trust, or IBIT, accounted for almost half of the outflows from Bitcoin ETFs that day, pulling $290.8 million. This occurred when the Bitcoin Spot ETF lost $488.4 million.
Traders sold $149.3 million worth of stocks on Friday, contributing to 77% of the day’s outflows according to IBIT data.
Despite the recent turbulence, IBIT remains a highlight for BlackRock, as lifetime net inflows total an impressive $88 billion. This indicates that the overarching narrative hasn’t shifted drastically, even if weekly profits and losses have.
Another REX volatility play
REX Shares, based in New York, has garnered a reputation for its unconventional ETFs. Its latest product treats stock volatility, including that of crypto companies, as a characteristic to capitalize on rather than an obstacle.
The REX IncomeMax Option Strategy ETF trades on Nasdaq under the ticker ULTI. It targets some of the most volatile U.S. stocks, including well-known crypto names like Core Scientific and the exchange Gemini.
However, the portfolio isn’t limited to crypto. This fund utilizes a dynamic options strategy designed to convert price movements into weekly distributions while aiming to minimize risk.
For investors interested in exposure to “crypto beta with equity” trading, this ETF presents a noteworthy option. It’s yet another indication that Wall Street is actively repackaging crypto volatility in diverse ways.
Other keys
Stop the core fusion dance: Investors in Bitcoin miner Core Scientific have halted the company’s $9 billion merger with AI computing firm Coreweave.
Please remit this: Western Union has trademarked WUUSD. Confusingly, this appeared after the company revealed its planned stablecoin would be labeled USDPT, possibly as a protective measure to prevent others from using that ticker.
