Coinbase’s latest earnings sent a chill through crypto markets—and for good reason. The headline numbers tell a mixed story: yes, revenue grew 3.4% year-on-year, but the sequential (QoQ) decline was a steep 26%. Most worrying, core revenue from trading—a critical pillar for Coinbase’s business—fell well short of expectations. The market punished the miss with a swift 9% drop in the stock, and it’s not hard to see why: after a strong first quarter powered by resurgent crypto activity, a sudden trading volume slump suggests the business is far more cyclical and less robust than some bulls hoped.

The reliance on investment gains, especially the $1.5 billion in unrealized gains from Circle, should absolutely be a red flag for investors who care about the health of the core business. While GAAP EPS of $5.14 looks great on the surface, strip out those non-operating gains and the adjusted EPS of $1.96—while a beat versus forecasts—doesn’t change the bigger narrative: without strong, sustained trading activity, Coinbase’s earnings power is fragile.

The sharp QoQ drop in volumes tells us that retail and institutional engagement faded significantly after Q1’s hype. This isn’t just a Coinbase story—it’s a symptom of crypto market cooling, falling volatility, and less speculative fervour across the board. Coinbase, for all its brand strength and regulatory progress, is still highly levered to the next bull phase in crypto prices. When Bitcoin and Ethereum trade sideways or slide, volumes dry up and so do transaction fees.

Will the stock dip further, and where’s the “safe zone”?

With sentiment shaken and the bull case now under review, more downside is likely in the short term—especially if crypto markets remain sluggish or if Bitcoin can’t regain upward momentum. Historically, Coinbase has found stronger support around $180–$190 on prior pullbacks; if negative sentiment snowballs, a test of the $160–$170 range isn’t out of the question, especially if BTC and ETH see further weakness.

Bottom line:

Coinbase is still the best pure-play U.S. crypto stock for long-term believers, but after this earnings miss, patience is key. Let the dust settle, look for stabilization in crypto volumes, and consider scaling in only as the stock approaches prior support levels and market sentiment improves. In the meantime, reliance on investment gains won’t cut it—the street wants to see durable, recurring revenue from real trading activity before declaring a true bottom.