Coinbase (COIN) offered 12,652 ether ($25 million on the present worth) within the fourth quarter, when it was valued about double the extent now, in line with Geoffrey Kendrick, the worldwide head of digital property analysis at Standard Chartered Financial institution.
In a notice, Kendrick mentioned he analyzed the crypto alternate’s quarterly filings, which present it holds ether (ETH) below completely different classes, together with funding and operational functions. He estimates that about 80% of income generated by Base, Coinbase’s Ethereum layer-2 blockchain, is revenue.
Notably, the timing of the corporate’s trades aligns with worth actions, he mentioned. Coinbase internet purchased within the third quarter, when ETH was buying and selling at round $2,500, and internet offered within the fourth, when the second-largest cryptocurrency reached $4,000. It is now about $2,000.
“The fact that they net bought in Q3 (when prices were low on average) and net sold in Q4 (higher average prices) tells me Coinbase acts like any risk-adjusting profit maximiser would do,” Kendrick wrote.
Coinbase mentioned it offered some ether to fund operations, with out saying how a lot was concerned.
“Base earns ETH from sequencer fees, and the ETH we earn is primarily held for long term investment or used for operational expenses, including tax liabilities and reinvesting in growth via things like salaries, grants, acquisitions, and public goods funding,” a spokesperson mentioned in an e mail.
In keeping with Kendrick’s calculations, over the previous three quarters, internet ETH gross sales totaled 1,558, implying a sample of strategic promoting fairly than accumulation. He reached his conclusion by subtracting Base’s earnings in ETH from adjustments in Coinbase’s ETH holdings.
The spokesperson reiterated that the corporate would not usually participate in buying and selling actions.
“As shared in our 10K: ‘Crypto assets held for investment are primarily held long term … we do not engage in regular trading of these assets but may lend them through Prime Financing or stake them.’ Our ETH held for investment grew 20% over the course of 2024,” the spokesperson said.
This isn’t the first time Coinbase has had to respond to suggestions it is selling the ether generated by Base. Last month a member of Base rejected speculation surrounding potential ETH sales saying the exchange had “accumulated $300M+ in ETH, which is more than 2x all of Base’s ETH earnings over time.”
