Bitcoin Back at $50k: New Dawn or Deja Vu?

Bitcoin has cracked the $50k barrier for the first time since 2021.

An achievement for sure, but the response in the market feels, shall we say… muted.

Let's explore why, by taking a trip back in time.

It’s February 2021…

Amongst all of that… BTC is taking off.

What Was Fueling Bitcoin Then?

Notably, it’s important to state that when bitcoin first crossed $50,000, it was pure chaos. It was a time of media frenzy, high-profile endorsements, and institutional first-movers.

For context, this was right around when Gamestop (GME) was up 8,500% after the Wall Street Bets crowd squeezed the institutional shorts. ☠️

Anyway, here were the big stories coming out back then, according to our archives:

Now, there were a lot of other notable “catalysts” to dig into here… DeFi was taking off around that same time as well, for example, but hopefully that gives you a good picture.

What's Fueling Bitcoin Now?

As always it’s hard to say what exactly moves the price, but here are the ongoing catalysts that are likely contributing:

1. Over $2 Billion has flowed into ETFs
With GBTC outflows shrinking by the day, we’ve now seen 13 straight days of net inflows. BlackRock and Fidelity are still leading the charge, adding a combined $3 billion-plus to their funds. This has made them the two most successful ETF launches in history.

This type of demand shouldn’t be ignored. The ETFs are now buying up ~12.5x more BTC per day than the daily issuance.

2. The Bitcoin halving is approaching.
Meanwhile, as the Bitcoin halving nears, supply on exchanges has fallen to a level we haven’t seen since 2018. And we all know what happens when a decreasing supply meets increasing demand…

3. Growing institutional interest
Institutions are increasingly integrating bitcoin into their portfolios. Fidelity, for example, recently included its spot bitcoin ETF to one of their “All-In-One” portfolio funds, giving their investors a 1-3% allocation to bitcoin.

Imagine what happens when this becomes the norm. 

4. Macro factors
Federal Reserve Chair Jerome Powell’s recent comments about the unsustainable fiscal path of the U.S. and impending money printing might be giving investors some signal. Historically, Bitcoin prices have responded positively to increases in the global M2 money supply.

As we rip past $50,000, that pretty much sums up today’s bitcoin catalysts…

What’s The Difference?

Overall, there’s much less hysteria today than there was when we first crossed $50,000. This was evident not only in the all the splashy headlines, but by the volatility.

Back then, the price of bitcoin went from ~$32,000 to $59,000 in less than a month.

Today, it’s been much more of slow and steady grind.

Back then, it was a whirlwind of retail interest and sensational announcements.

Today, the landscape is calmer, with institutional investments and macroeconomic factors guiding bitcoin's path.

The big question: Does the quieter, more matured market of today hold more weight than the splashy headlines of yesterday? It's hard to say definitively. But one thing is clear: the current Bitcoin surge feels more grounded in real market dynamics than in fleeting media hype.

And that’s something to hang our hats on.

I’ll take bitcoin casually crossing $50k without much fanfare over Elon Musk dogecoin-fueled pumps any day of the week.

Anyway, in 2021, the year bitcoin last hit $50,000, the popular cryptocurrency also reached its all-time high of around $69,000.

Robinhood’s Q4 Earnings Spell Good News For Coinbase

Last night, Robinhood (HOOD) reported better-than-expected earnings leading to the stock popping more than 10% in trading today.

The earnings beat was driven primarily by the company reporting crypto transaction revenue increasing by 10% to $43 million in the quarter.

Furthermore, Robinhood reported that crypto volume was up 63% from the month prior and 89% quarter-over-quarter.

While none of this was really a surprise, as bitcoin and other cryptoassets have been on the rise in recent months, the exact retail trading data and tone from the earnings call were interesting.

During the call, Robinhood’s CFO Jason Warnick noted that although the company has listed all 11 bitcoin ETFs, only 5% of the overall trading in crypto products was through ETFs – 95% was still being traded directly. Furthermore, Warnick explained that the 5% in trading was “additive.”

We’ve previously written that investors should to keep an eye on Robinhood as a bonafide crypto stock. Yesterday’s results only prove that point, with CEO Vlad Tenev stating, “we think we can be the leading player in bridging the worlds of traditional finance and crypto.”

What Does This Mean For Coinbase?

Tomorrow, after the close, Coinbase will report Q4 earnings as well. With data regarding the increase in retail trading volume on Robinhood, we can begin to make some educated guesses about how well Coinbase did last quarter.

We can do this by making assumptions on a few data points.

To calculate Coinbase’s retail crypto trading volumes, we can use Robinhood as a proxy since all their trading volume comes from retail traders.

While Robinhood’s crypto volumes rose 89% quarter-over-quarter, Coinbase’s volumes were likely higher, being the go-to crypto exchange and all. Still, in our calculation, we used a range of potential trading volumes from an 80-120% increase.

Using the company’s previous quarterly retail trading volume of $11 billion, we get an estimated volume ranging from $19.8–24.2 billion.

Next, we need to assume what percentage of this retail trading volume Coinbase took in trading fees. Previous quarters have ranged from ~1.7–2.5%. In bull markets, Coinbase usually has a higher take rate, so for our calculation, we looked at a range of 1.9–2.5%.

Using these two estimates, we estimate Coinbase’s retail trading revenue of $376–605 million. 

Historically, Coinbase’s retail trading revenue represents ~50% of its total revenues. So for a super quick and dirty calculation to get their total revenue, we can just double this number. 

Doing this, we estimate that Coinbase’s Q4 revenue will come in at a mid-range of $968 million.

With the Street’s consensus estimate being $824 million, we predict a massive beat for the company.

At this point, you should be asking yourself if this is nonsense or not… and for good reason.

We did a lot of rounded calculations here. While you shouldn’t take this as investment advice, and you should always do your own due diligence, we hope this gives you a simple way to look at Coinbase’s earnings results.

Furthermore, to get a more granular look from other sources, we suggest taking a look at the predictions from Kunal Goel (prediction = $866M net rev) and CBduck (prediction = $1.06B net rev).

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