In the fourth quarter, Coinbase (COIN) sold 12,652 ether, amounting to approximately $25 million at current values, as reported by Geoffrey Kendrick, the global head of digital asset research at Standard Chartered Bank.
Kendrick noted that his analysis of the crypto exchange’s quarterly reports revealed it holds ether (ETH) for various purposes, including both investment and operational needs. He estimates that nearly 80% of revenue produced by Base, Coinbase’s Ethereum layer-2 blockchain, is profit.
Interestingly, he pointed out that the timing of the company’s transactions correlates with shifts in prices. Coinbase made net purchases in the third quarter when ETH was roughly $2,500 and net sales in the fourth quarter at around $4,000. The current price is about $2,000.
“The net buying in Q3 (when prices were generally lower) and net selling in Q4 (when prices were higher on average) suggests that Coinbase operates like any profit-maximizing entity would,” Kendrick indicated.
Coinbase explained that it sold some ether to support operations but did not disclose the specific amount involved.
A representative stated via email, “Base earns ETH from sequencer fees, and the ETH we acquire is generally retained for long-term investment or utilized for operational costs, including tax obligations and reinvestment in growth through salaries, grants, acquisitions, and funding for public goods.”
Kendrick’s assessments show that over the last three quarters, net ETH sales amounted to 1,558, signaling a trend of strategic selling rather than accumulation. He derived this conclusion by subtracting Base’s ETH profits from shifts in Coinbase’s ETH holdings.
The representative emphasized that the company typically does not engage in trading activities.
“As outlined in our recent filing: ‘Crypto assets held for investment are primarily kept for the long term… we do not participate in regular trading of these assets but might lend them through Prime Financing or stake them.’ Our ETH designated for investment grew by 20% throughout 2024,” the spokesperson mentioned.
This isn’t the first instance of Coinbase addressing implications that it is selling the ether earned through Base. Last month, a member of the Base team dismissed speculations regarding possible ETH sales, asserting that the exchange had “accumulated over $300M in ETH, which exceeds all of Base’s ETH earnings combined.”