Crypto exchange Coinbase’s total revenue fell 10% quarter-over-quarter to $2 billion in Q1, missing industry estimates by 4.1% as trading activity slowed across the market.

Coinbase’s net income was sliced by 95% from a near-company record $1.29 billion in Q4 to $66 million, in a large part due to Coinbase marking a $596 million paper loss on its crypto holdings.

The firm’s earnings per share of $1.94, however, managed to beat the Zacks Consensus Estimate of $1.85 for the quarter.

Coinbase’s May 8 results also showed that transaction revenue fell 18.9% quarter-on-quarter to $1.26 billion, as did trading volumes, which dipped 10.5% to $393 billion as crypto market cap dropped by double digits over the quarter, partly attributed to the Trump administration’s tariffs. 

In contrast, US President Donald Trump’s election win in November was considered one of the main catalysts behind the rising market prices in Q4. 

Key financial metrics for Coinbase in Q1. Source: Coinbase

Meanwhile, Coinbase’s subscription and services revenue rose 8.9% to $698.1 million, with stablecoin revenue the most significant contributor.

Despite the fall in total revenue and trading volume, Coinbase said it gained more market share in global spot and derivatives trading while deepening its presence in emerging markets such as Argentina and India with “critical registrations.”

On the regulatory front, Coinbase said the dismissal of its lawsuit with the US securities regulator marked a “major judicial win for balanced, innovation-friendly regulation, and our efforts to make crypto mainstream.”

Coinbase makes deal with major crypto derivatives platform

On May 8, Coinbase agreed to acquire crypto derivatives platform Deribit for $2.9 billion, marking the industry’s largest corporate acquisition to date. 

The acquisition will expand Coinbase’s footprint in the crypto derivatives market immensely, which previously had been limited to its Bermuda-based platform.

Coinbase noted that Deribit facilitated over $1 trillion in trading volume in 2024 and has around $30 billion of current open interest. 

Related: $45 million stolen from Coinbase users in the last week — ZachXBT

The deal now makes Coinbase the “global leader” in crypto derivatives trading, the firm said. 

Competitor firm Kraken struck a similar deal in March when it agreed to acquire futures brokerage NinjaTrader for $1.5 billion.

Coinbase’s Deribit deal contributed to a 5.1% rise in Coinbase’s (COIN) share price during the May 8 trading day, though shares have pulled back 3.1% in after-hours since the crypto exchange posted its Q1 results.

Coinbase’s change in share price on May 8, including after-hours. Source: Google Finance

Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight

Tech company Meta is reportedly exploring integrating stablecoin payments into its platforms after a three-year hiatus from cryptocurrencies, Fortune reported, citing sources familiar with the matter.

The Facebook parent held talks with several crypto infrastructure firms in consultation but has not chosen a decisive course of action, according to the report.

One source said the company may take a multi-token approach and integrate support for popular stablecoins such as Tether’s USDt (USDT), Circle’s USD Coin (USDC) and others.

Meta is the latest tech firm to integrate or explore the use of stablecoins for payments, as they increasingly attract institutional interest and investment, causing the stablecoin market capitalization to soar past $230 billion.

An overview of the stablecoin market. Source: RWA.XYZ

Related: US Stablecoin bill blocked as Democrats withdraw support

Stablecoins attract more institutional investment and become US strategic interest

Several payment processing companies announced investments into stablecoin companies or announced stablecoin integrations in May this year.

On May 7, payments giant Visa announced that it invested in stablecoin startup BVNK. Although details of the deal remain scant, Visa’s head of products and partnerships, Rubail Birwadker, said stablecoins were commanding an ever-greater market share of payments.

Stripe, a global payments platform, launched stablecoin-based accounts for customers in over 100 countries on May 7.

The accounts allow users to store stablecoin balances or transfer the tokens to other users and withdraw the stablecoin balances as fiat currency to traditional bank accounts.

World Liberty Financial (WLFI), a crypto firm backed by US President Donald Trump, launched USD1, a US dollar-pegged stablecoin, in March.

In May, USD1 was the seventh-largest stablecoin by market cap — highlighting the rapid growth of the tokenized fiat market.

The Trump administration has repeatedly stated that stablecoins are central to US policy and a way to extend US dollar hegemony by harnessing demand for US government Treasurys and other government securities.

Source: Scott Bessent

However, comprehensive stablecoin regulations were stalled on May 8 after Democratic Senators blocked the GENIUS Stablecoin bill — dashing the hopes of senior officials in the Trump administration.

“The Senate missed an opportunity to provide leadership today by failing to advance the GENIUS Act. This bill represents a once-in-a-generation opportunity to expand dollar dominance,” Treasury Secretary Scott Bessent wrote in a May 8 X post.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Key takeaways:

97% of the $8.3 billion in Bitcoin put options expire worthless at a $102,000 BTC price.

Short covering above $105,000 could trigger a Bitcoin price rally to new highs.

Bitcoin (BTC) soared above $101,000 on May 8, reaching its highest level in over three months. The 4.6% daily BTC price gain triggered $205 million in liquidations of bearish futures positions and eroded the value of nearly every put (sell) option. Traders now question whether Bitcoin is poised to break its $109,354 all-time high in the near term.

Bitcoin put (sell) options open interest for May-June-July, USD notional. Source: Laevitas.ch

The aggregate Bitcoin put (sell) option open interest for the next three months stands at $8.3 billion, but 97% of those have been placed below $101,000 and will likely expire worthless. Still, this does not mean every put options trader was betting on Bitcoin’s downside, as some may have sold those instruments and profited from the price gains.

Top BTC option strategies at Deribit past two weeks. Source: Laevitas.ch

Among the largest option strategies traded at Deribit is the “bull put spread,” which involves selling a put option while simultaneously buying another put at a lower strike price, capping both maximum profit and downside risk. For example, a trader aiming to profit from higher prices might sell the $100,000 put and buy the $95,000 put.

Bull put spread profit/loss. Source: Strike-Money

Cryptocurrency traders are known for their exaggerated optimism, and this is reflected in the leading strategies on Deribit’s options markets, such as the “bull call spread” and the “bull diagonal spread.” In both cases, traders anticipate Bitcoin prices at expiry to be equal to or higher than the options traded.

$100,000 Bitcoin boosts bullish options, but shorts may resist

If Bitcoin sustains the $100,000 level, most bullish strategies will yield positive results in the May and June options expiries, giving traders additional incentives to support upward momentum. However, there is the possibility that sellers (shorts) using futures markets will exert their influence to prevent a new Bitcoin all-time high.

Related: Coinbase to acquire options trading platform Deribit for $2.9B

The aggregate open interest on Bitcoin futures currently stands at $69 billion, indicating substantial demand for short (sell) positions. At the same time, higher prices might force bears to close their positions. However, this “short covering” effect is significantly muted in fully hedged positions, meaning those traders are not particularly sensitive to Bitcoin price movements.

For instance, one could buy spot Bitcoin positions using margin or spot exchange-traded funds (ETFs) while simultaneously selling the equivalent in BTC futures. Known as the “carry trade,” this strategy is delta neutral, so the profit comes regardless of price swings, as the monthly Bitcoin futures trade at a premium to compensate for the longer settlement period.

Bitcoin 2-month futures annualized premium. Source: laevitas.ch

The Bitcoin futures premium has been below 8% for the past three months, so the incentives for the “carry trade” have been limited. Hence, it is likely that some form of “short covering” will occur if Bitcoin surges above $105,000, which greatly improves the odds of a new all-time high over the next couple of months.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.