Introduction
Coinbase delivered a stellar Q3 performance with $1.9 billion in revenue as trading volumes rebounded, while BlackRock’s Bitcoin ETF saw significant outflows amid price volatility, and REX Shares launched a new ETF targeting crypto-exposed stocks. The crypto markets continue to demonstrate both opportunity and turbulence for investors, with volatility proving both a challenge and an opportunity across different financial products.
Key Points
- Coinbase expanded from 300 to over 40,000 assets in the U.S. through DEX integrations and launched CFTC-regulated perpetual futures
- BlackRock's IBIT remains the firm's ETF star with $88 billion in cumulative inflows despite recent single-day outflows of $290.8 million
- REX Shares' ULTI ETF uses dynamic options strategies on volatile stocks including crypto companies to convert price swings into weekly distributions
Coinbase's Volatility-Driven Quarter
Coinbase Global Inc. (COIN) exceeded third-quarter expectations with approximately $1.9 billion in total revenue, demonstrating a remarkable recovery as spot trading volumes returned to the exchange. The company’s transaction revenue hit $1.0 billion, representing a significant rebound from previous quarters and highlighting how market volatility, while challenging for traders, continues to benefit the exchange’s bottom line. The strong performance extended into the fourth quarter, with October transaction revenue already reaching $385 million, indicating sustained momentum.
Beyond core trading activities, Coinbase benefited from diversification into subscription and services revenue streams, including staking, custodial services, and interest products. The company also revealed that Base, its incubated Ethereum Layer-2 network, had become profitable, adding another revenue stream to its growing ecosystem. This diversification strategy has proven crucial as the company expands its asset offerings from approximately 300 to over 40,000 assets in the U.S. through decentralized exchange integrations, according to CEO Brian Armstrong.
The expansion included the launch of CFTC-regulated 24/7 perpetual futures in the United States, tapping into the popular trading instrument that has become all the rage among traders. Despite some industry experts raising concerns about the risk perpetual futures introduce to markets, the move represents Coinbase’s continued effort to capture market share across different crypto product categories. The company’s stock ended Friday with a 4.65% gain, though it remained 3% lower for the week, reflecting the ongoing volatility in crypto-related equities.
Bitcoin ETF Turbulence and Structural Resilience
While Coinbase benefited from market volatility, Bitcoin exchange-traded funds experienced significant outflows as BTC prices dropped below $110,000. BlackRock’s iShares Bitcoin Trust (IBIT) accounted for nearly half of the Bitcoin ETF category’s outflows on Thursday, experiencing $290.8 million in withdrawals on a day when Bitcoin spot ETFs collectively lost $488.4 million. The trend continued into Friday, with IBIT seeing traders sell $149.3 million worth of shares, comprising 77% of outflows for the day according to data from Farside Investors.
Despite these short-term outflows, IBIT remains BlackRock’s standout performer among its ETF catalog, with cumulative lifetime net inflows maintaining a massive $88 billion in assets under management. The recent volatility serves as a reminder that while single trading sessions can impact short-term performance, they don’t alter the structural adoption story for Bitcoin ETFs. The outflows coincided with Bitcoin’s price decline, demonstrating the continued sensitivity of institutional flows to price movements in the underlying asset.
The IBIT experience highlights the dual nature of crypto market participation for traditional finance institutions—while offering substantial growth opportunities, these products remain vulnerable to the inherent volatility of digital assets. However, the strong cumulative inflows suggest that institutional interest in Bitcoin exposure through regulated vehicles remains fundamentally intact, with temporary price movements triggering tactical adjustments rather than strategic exits.
Wall Street's New Volatility Packaging
New York-based REX Shares has introduced a novel approach to crypto market volatility with its REX IncomeMax Option Strategy ETF (ULTI), an actively managed fund that treats volatility in equities—including crypto companies—as a feature rather than a bug. The fund targets some of the market’s most volatile U.S. stocks, naturally including crypto-exposed names like crypto miner Core Scientific, crypto exchange Gemini, and crypto lender Figure, while extending beyond the crypto sector.
The ULTI ETF operates through a dynamic options strategy that combines puts and calls to convert price swings into weekly distributions while attempting to cap tail risk. This approach represents another iteration of Wall Street’s ongoing effort to package crypto volatility in different wrappers, offering investors exposure to the ‘crypto-beta via equities’ trade with an income overlay. For income-focused investors seeking crypto exposure without direct asset ownership, ULTI provides an alternative pathway to participate in the sector’s growth while generating regular distributions.
The launch comes amid other significant developments in the crypto equity space, including Bitcoin miner Core Scientific’s investors rejecting a $9 billion merger with AI computing firm CoreWeave. Meanwhile, traditional finance giant Western Union has trademarked WUUSD, potentially for a stablecoin initiative, though confusingly after the company had indicated USDPT would be the ticker for its planned stablecoin. These moves underscore the continued convergence between traditional finance and digital assets, with established players increasingly exploring crypto-related opportunities.
📎 Related coverage from: decrypt.co