The SEC approved nearly a dozen spot Bitcoin ETFs on January 10 in what was heralded as a “watershed” moment for the crypto industry, opening the door for investors to gain exposure to Bitcoin without directly holding it. It’s widely expected that this approval and subsequent widespread access for institutions and retail investors will shape up to be one of the most bullish fundamental moments in Bitcoin’s history.
We have been anticipating this moment since 2019 when we stated: “One of the biggest hurdles for institutions, however, is not the idea of a world run on digital currencies, but rather the decentralization concept and the need for cryptocurrency storage. Institutional investors need to know the assets are secure, insured, and under the care of a trusted third party, per SEC rules, which requires advisers to keep client funds with a qualified custodian.”
PARIS, FRANCE – FEBRUARY 26: In this photo illustration, the Coinbase cryptocurrency exchange logo … [+] (C) is seen on the screen of an iPhone on February 26, 2021 in Paris, France. Cryptocurrency trading platform Coinbase has filed for registration with the SEC on Thursday for an IPO via direct listing on the Nasdaq and will likely be the largest IPO of the year. Coinbase reported $ 1.28 billion in revenue in 2020 (+ 140% year on year), for net profit of $ 320 million. (Photo illustration by Chesnot/Getty Images)
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With a first batch of spot BTC ETFs approved, it’s prudent to assess the potential impact to exchanges and platforms, given that exchanges will now be competing on fees with ETFs, while increasing BTC prices and the next halving serve as potential tailwinds for miners.
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Trading Volumes Have Declined Significantly for Coinbase, Robinhood
For exchanges and trading platforms, such as Coinbase and Robinhood, that allow direct ownership of Bitcoin and other cryptocurrencies, the ETF approval serves as a double-edged sword. The bull thesis is centered around how the approvals will help usher in a wave to new all-time highs for Bitcoin, and how that could translate into higher transaction revenues (which have declined significantly), while the main headwind and primary story is that the two may now be forced to compete on fees in the long run, which can keep transaction revenues depressed as trading volumes remain far below peak levels.
Coinbase has expressed no desire to change its fee structure to compete with ETFs in the immediate term, per President and COO Emilie Choi’s remarks in its Q3 earnings call:
Q: “Will Coinbase consider reducing transaction fees to make them more competitive with other platforms where ETFs are being traded at significantly lower prices?”
A: “We have no current plans to reduce transaction fees because of ETFs. If you just zoom out a little bit, spot ETF should be a positive catalyst for the entire crypto space. They should add credibility to the market, and we should see increased liquidity and market stability as we’ve seen with other asset classes such as gold.”
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Choi’s answer hinted towards a potential headwind to Coinbase’s model – market stability. Coinbase noted that in Q3, “crypto asset volatility, a driver of our trading business, continued to decline, and it reached levels that we haven’t measured since 2016.”
Volatility heightened in October as Bitcoin broke the $30,000 mark and ascended towards $35,000, … [+] while the remainder of Q4 witnessed relatively heightened volatility as well.
Source: Google Finance
A majority of Q3 witnessed little to no volatility in Bitcoin prices – August saw one decline of more than (10%) and a 6% rise, but aside from that, prices were relatively stable. Volatility heightened in October as Bitcoin broke the $30,000 mark and ascended towards $35,000, while the remainder of Q4 witnessed relatively heightened volatility as well.
Due to stable crypto prices, Coinbase’s trading volume dipped more than (17%) QoQ and (52%) YoY to $76 billion in the quarter, while transaction revenues declined nearly (12%) QoQ and (21%) YoY to $289 million.
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Heightened crypto volatility is a primary driver of Coinbase’s trading business, so periods with less volatility, i.e. stability, correlate to lower trading volumes and transaction revenues. Coinbase noted that its October transaction revenue was $105 million (around 9% higher than Q3’s monthly average), but cautioned investors not to extrapolate that figure for Q4. If you do extrapolate that sum, Q4’s transaction revenues would fall between $310 million to $320 million, signaling flat to a low single-digit YoY decline in transaction revenue despite an ~80% rally in Bitcoin.
In a broader view, both trading volume and transaction revenue have declined significantly since peaking in Q4 2021, when Bitcoin made a round trip from $47,000 to new highs above $64,000 before pulling back to $47,000. Trading volumes in Q3 were nearly (83%) lower than Q4 2021, at $76 billion compared to $547 billion.
Trading volumes in Q3 were nearly (83%) lower than Q4 2021, at $76 billion compared to $547 billion.
Source: Coinbase
Transaction revenues similarly are down more than (87%) since then, with five straight quarters below $400 million. Transaction revenues accounted for more than 46% of Coinbase’s total revenue in Q3, so there is heightened risk to Coinbase’s model now that a fee-competitive asset class exists, as it may potentially draw away trading volume and thus transaction revenue via lower fees.
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Coinbase’s transaction revenues are down more than (87%) since a peak in Q4 2021, with five straight … [+] quarters below $400 million.
Source: Coinbase
Monthly transacting users have also declined (40%), from 11.2 million in Q4 2021 to 6.7 million in Q3 2023, with the decline accelerating over the past two quarters.
Monthly transacting users have also declined (40%), from 11.2 million in Q4 2021 to 6.7 million in … [+] Q3 2023, with the decline accelerating over the past two quarters.
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Source: Coinbase
These trends in trading volumes and transaction revenues are not exclusive to Coinbase, as Robinhood is reporting similar weaknesses in both metrics.
Robinhood’s notional crypto trading volume was ~$6.8 billion in Q3, a (25%) QoQ and (53%) YoY decline. Since Q4 2021, trading volume has fallen (85%), interestingly nearly the exact percentage drawdown as Coinbase.
Robinhood’s notional crypto trading volume was ~$6.8 billion in Q3, a (25%) QoQ and (53%) YoY … [+] decline.
Source: Robinhood
Transaction revenues peaked in Q2 2021 for Robinhood at $233 million, before plunging to $51 million the next quarter; unlike Coinbase, Robinhood did not see a second higher peak in transaction revenue. For Q3 2023, Robinhood reported $23 million in transaction revenue, representing a (26%) QoQ and (55%) YoY decline; unlike Coinbase, crypto transaction revenues are under 5% of Robinhood’s total revenue, so there is less risk from ETFs, as investors could choose to invest in the ETFs directly on Robinhood’s platform.
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For Q3 2023, Robinhood reported $23 million in transaction revenue, representing a (26%) QoQ and … [+] (55%) YoY decline.
Source: Robinhood
Robinhood hinted that it is more willing to be competitive on fees, saying that it rolled out some UI changes in Q3 so its crypto customers “can clearly see the spreads that we offer on our crypto transactions. This makes it easier for customers tosee their all-in cost of execution, compare it against other platforms and see how great of a deal Robinhood is giving them.” By focusing on offering a better deal than competitors, Robinhood is potentially limiting upside to transaction revenues via a lower average fee – its average fee rate in Q3 of 0.338% was more than 10% lower than Coinbase’s average fee rate of 0.380%.
With a basket of ETFs now approved, Robinhood and Coinbase will have to compete on fees, as certain classes of investors are likely to choose ETFs over directly holding crypto for exposure due to trust. In just the first week after the approval of the ETFs, we’ve seen strong demand for top of the class funds: BlackRock’s iShares Bitcoin Trust has surpassed $1 billion AUM in its first week, a rare milestone that few ETFs share.
This is the first major speed bump for the bull case – how Coinbase and Robinhood can find ways to drive trading volumes higher, while maintaining higher fees than ETFs, to drive an inflection in transaction revenues.
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Retail trading accounts for more than 95% of Coinbase’s transaction revenue while accounting for less than 15% of trading volume – this suggests that to drive a meaningful uptick in transaction revenues, Coinbase will need to see strong growth in retail trading volumes. More volatile Bitcoin prices, or a run to higher highs, can serve as a catalyst for higher trading activity; however, Coinbase holds the view that the ETFs will lead to more stability in the market, meaning more investors may choose to buy and hold with less active trading.
Custodial Fee Benefits & Risk for Coinbase
The ETF approvals offer one direct benefit to Coinbase, in that it stands to earn custodial fees by serving as the custodian for 8 of the 11 approved ETFs, including the most popular of the class, the iShares Bitcoin Trust.
Coinbase is serving as the custodian for 8 of the 11 approved ETFs, including the most popular of … [+] the class, the iShares Bitcoin Trust.
Source: Bloomberg
Coinbase will be providing custodial, trading and lending services to the ETF issuers, giving it a stream of revenue via fees for these services, but opening up the door to a significant concentration of risk. Custodial fees currently account for ~2.5% of Coinbase’s revenue at less than $16 million in Q3, leaving opportunity for significant growth via ETFs – however, impacts from ETFs will not be visible until Q1 earnings, given the recent launch date.
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Serving as the sole custodian for more than three-quarters of the approved ETFs heightens risks to investors, as a security compromise, hack or other operational failure on Coinbase’s part could significantly impact the ETF’s value or increase difficulty in accessing funds.
A multi-custodian approach helps safeguard investor assets by reducing the dependency on a single entity for providing all of the necessary services for an ETF to function. Therefore, it is likely that these ETFs, and other approved ETFs, will diversify away from relying on Coinbase as a sole custodian to having multiple custodians. This could reduce custodial fees should Coinbase lose its status as custodian for more than 75% of spot Bitcoin ETFs.
Conclusion
The approval of the spot Bitcoin ETFs is expected a game-changer for crypto, as it is widely believed that the approval and subsequent widespread access for institutions and retail investors will shape up to be one of the most bullish fundamental moments in Bitcoin’s history.
To attempt to size the demand the ETFs may create, Grayscale has $18 billion assets under management, and iShares has surpassed $1 billion already. If we assume over the long run that these Bitcoin ETFs average $5 to $8 billion AUM, this could add an additional $55 to $90 billion in demand for a limited supply of Bitcoin. As a reminder, Bitcoin is limited to 21 million Bitcoins and the next halving occurs in 2024. Halving can lead to a higher value for Bitcoin as it reduces the number of new bitcoins being generated by the network.
A push to new all-time highs for Bitcoin sits at the core of the bull thesis for crypto platforms such as Coinbase, as higher prices theoretically would lead to higher volatility and thus higher trading volumes and higher transaction revenues. Even with Bitcoin’s 80% push back to the high $40,000 level, Coinbase’s clues suggest that transaction revenues may not meaningfully accelerate in the high-teen to low-20% range.
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Given this substantial decline in trading volume and resulting declines in transaction revenue for both Coinbase and Robinhood, the bull case centered around ETF approval ushering in strong revenue growth is weakened. There are many moving parts with how the ETFs will alter the crypto landscape, but unless both platforms witness trading volume more than double over the next few quarters, it is hard to see how this creation of a fee-competitive environment can serve as a tailwind to revenue growth over the short to medium-term.
If you own crypto stocks or Bitcoin, or are looking to own crypto stocks and Bitcoin, we encourage you to attend our weekly premium webinars, held every Thursday at 4:30 pm EST for premium members to discuss how to navigate the broad market, as well as various stock entries and exits. We offer trade alerts plus an automated hedging signal. The I/O Fund team is one of the only audited portfolios available to individual investors. Learn more here.
While studies reveal institutional investors and wealth managers believe tokenized ETFs will drive mainstream market adoption for cryptocurrency, there looms the theft of bad actors that most often go untraceable.
Currency throughout history that became mainstream
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Barriers to the expansion of tokenization are starting to fall as major investment firms consider launching tokenized ETFs, according to new global research by London-based Nickel Digital Asset Management (Nickel), Europe’s leading digital assets hedge fund manager founded by alumni of Bankers Trust, Goldman Sachs and JPMorgan.
Its study with institutional investors (pension funds, insurance asset managers and family offices) and wealth managers at organisations which collectively manage over $14 trillion in assets found almost all (97%) believe the potential launch of tokenized ETFs such as BlackRock’s will be important to the expansion of the sector with nearly one in three (32%) rating the development as very important.
The study also reflected the belief that tokenization will continue to grow, with nearly 70% of respondents believing that fund managers looking to tokenize investment funds and asset classes will increase over the next three years.
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Nickel’s research with firms in the US, UK, Germany, Switzerland, Singapore, Brazil and the United Arab Emirates found growing awareness of the benefits of tokenization. Private markets are seen as offering the greatest potential for tokenization, with almost 70% seeing private equity funds as the asset class with the most opportunity, followed by fixed income (55%) and public equities (42%).
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, said: “Tokenization is quickly moving from theory to real-world adoption as institutional investors grow more comfortable with its benefits and see major players enter the space. When firms like BlackRock step in, it fundamentally shifts the conversation. This development is timely for our multi-manager vehicle as expanding liquidity depth will allow some of our pods to start trading tokenized assets in the coming months.”
To address potential criminal threat, an advanced detection system to identify and trace blockchain funds connected with criminal activity was presented earlier this week at the Annual CyberASAP Demo Day in London.
The system, called SynapTrack, enables faster and more accurate detection of fraudulent activity using blockchains and cryptocurrencies, where traditional anti-money laundering and counter-terrorist financing systems struggle to keep pace.
Although current fraud detection methods pick up unusual activity, they deliver an extremely high rate (40%) of false positive reports. These require manual checking by compliance professionals, resulting in backlogs in identifying and acting on suspicious activity.
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The SynapTrack system is designed to deliver a substantially lower rate of false positives. It has already been tested using real-life data from the notorious 2025 Bybit hack, where criminals stole $1.5bn of digital tokens from a cryptocurrency exchange. SynapTrack traced the hacker with 98% accuracy.
The team behind SynapTrack is keen to hear from exchanges, financial regulators or law enforcement agencies who want to test the prototype in real-world conditions.
SynapTrack uses a validated methodology to score the likelihood of transactions being part of a money laundering scheme. It has a self-improving algorithm that continuously adapts to new tactics – dynamically identifying suspicious patterns in blockchain transactions. It has a universal cross-chain capability, and is designed around how compliance teams work, presenting results in a dashboard. No infrastructure changes are needed for installation.
It is relatively easy to obscure fraudulent or criminal activity by moving funds between blockchains, or dispersing them across many blockchains, in what are known as ‘cross-chain’ transactions. It is these transactions that pose the greatest difficulty for existing anti-money laundering systems.
SynapTrack was developed by University of Birmingham computer scientists Dr Pascal Berrang and PhD student Endong Liu, in collaboration with blockchain developer Nimiq. Dr Berrang’s research is in IT security and privacy on blockchain, artificial intelligence and machine learning. The subject of Endong Liu’s PhD is transaction tracing. Nimiq is supporting with blockchain-specific insights, knowledge of real-world constraints, and implementation.
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The team is currently fundraising to ensure regulatory readiness and complete the team with a CEO and software developers.
Dr Berrang said: “The last few years have seen a near-exponential growth in blockchain transactions. While many of these are legitimate, blockchains are attractive to criminals as funds can be moved very quickly to other jurisdictions. Our work with Nimiq and the creation of SynapTrack is addressing this black spot, and will enable more effective regulation, making the whole ecosystem of blockchain safer and more trustworthy.”
With the financial market and cybersecurity industry converging, cryptocurrency is here to stay.
Bitcoin briefly reclaimed $65,000 before pulling back to $64,700 as the Iran conflict continued to escalate through Saturday.
Iranian state media reported at least 70 killed in its Hormozgan province, per Aljazeera, including a strike on an elementary school. Israel activated air raid alerts after detecting fresh missile launches from Iran.
Trump told the Washington Post that “all I want is freedom for the people.” NATO said it was “closely following” developments, China urged an immediate ceasefire, and Turkey offered to mediate.
Bitcoin’s inability to hold $65,000 on the bounce suggests sellers remain in control, but the relative stability given the severity of the headlines points to thin weekend order books rather than active selling pressure.
Headline risks persist for BTC traders as the U.S. day progresses.
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What happened earlier
Earlier in the day, BTC neared $63,000 in Saturday trading after the U.S. and Israel launched military strikes on Iran, pushing the largest cryptocurrency down roughly 3% in a matter of hours and extending what had already been a difficult weekend for risk assets. The move brought bitcoin to its lowest level since the Feb. 5 crash, when the token briefly dipped below $60,000.
Israeli Defense Minister Israel Katz declared an immediate state of emergency across all areas of Israel. A U.S. official confirmed American participation in the strikes, The Wall Street Journal reported.
The sell-off follows a well-established pattern. Bitcoin trades 24 hours a day, 7 days a week, while equity and bond markets are closed on weekends.
That makes it one of the only large, liquid assets available for traders to sell when geopolitical risk spikes outside of traditional market hours.
The result is that bitcoin often acts as a pressure valve for broader risk-off sentiment during weekend events, absorbing selling that would otherwise spread across equities, commodities, and currencies if those markets were open.
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The attack risks a wider regional conflict in one of the most economically sensitive parts of the world, following a month-long U.S. military buildup and failed negotiations over Iran’s nuclear program.
Both Ethereum(ETH 6.03%) and XRP(XRP 3.76%) are tried-and-tested blockchains which have survived (and sometimes thrived) for years on end. That means they’re both sturdy enough to be candidates for a big investment, like $5,000, and for holding over the very long term, or even forever.
So which of these two leading coins is the better option for a forever hold?
Image source: Getty Images.
Ethereum has more ways to grow
Forever is a long time, especially for an investment in an emerging sector like crypto. Therefore, an asset’s optionality regarding where it can derive growth is a key factor, as today’s growth drivers might peter out and new ones are likely to emerge.
On that front, Ethereum has plenty of options. It already hosts a large decentralized finance (DeFi) ecosystem worth more than $53 billion today, powered by a massive stablecoin base of $159 billion. That existing base of capital is a strategic asset because it gives developers and financial institutions a reason to build new products right where liquidity already lives. It also gives investors exposure to many possible growth lanes at once, from the onboarding of tokenized real-world assets (RWAs) to the development of new settlement rails for payments between AI agents.
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Today’s Change
(-6.03%) $-123.58
Current Price
$1924.97
Key Data Points
Market Cap
$232B
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Day’s Range
$1898.54 – $2048.55
52wk Range
$1398.62 – $4946.05
Volume
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20B
Another advantage is that Ethereum has a track record of consistently shipping large protocol upgrades. The Pectra upgrade, for example, landed on the mainnet in May 2025, followed by the Fusaka upgrade in December. Two similarly large feature packages are expected for 2026, and they should help to build the chain’s ability to scale up without spiking transaction costs.
If you plan to hold an asset indefinitely, this network’s culture of iterative improvement reduces the risk that its technical capabilities will become irrelevant as emerging opportunities for growth arise. Its habit of attracting and retaining substantial capital also helps prevent that outcome.
XRP has to keep winning specific fights over time
XRP is not a bad crypto asset by any means, but its long-term burden is its far narrower positioning than Ethereum.
Ripple, the coin’s issuer, built the XRP Ledger (XRPL) ecosystem as a toolkit of financial technologies to support specific workflows in institutional finance, especially cross-border payments and money transfers, and, more recently, the management of tokenized asset capital. The coin’s value is thus derived from the utility of its ledger.
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That focus could pay off if the financial companies the chain targets like what it’s offering, but it also concentrates risk. Financial institutions move cautiously, and winning them over is a slow, grinding process of catering to their needs and building strong relationships. Their technology adoption process can stall for years, even when the product works, and decision-makers broadly want to adopt the new tech.
To Ripple’s credit, the XRP Ledger includes plenty of features that match institutional requirements and seek to minimize their potential pain points. The network’s authorized trust lines, for instance, let tokenized asset issuers whitelist who can hold their issued tokens, which is a feature that supports regulatory constraints around who can legally custody an asset. Similarly, the ledger supports freezing tokens when suspicious activity appears, which is a control that traditional finance teams tend to expect in regulated asset workflows.
Today’s Change
(-3.76%) $-0.05
Current Price
$1.35
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Key Data Points
Market Cap
$83B
Day’s Range
$1.34 – $1.42
52wk Range
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$1.14 – $3.65
Volume
2.8B
But holding a coin forever is unforgiving of sustained competitive pressure, which XRP doubtlessly faces. Its competitors include fintech companies and other cryptocurrencies, not to mention the internal tech development capabilities of many of its target users in big banks. So it’ll need to continuously one up the other players in its space if it’s going to grow over the long term, and it’s hard to believe that it’ll win every round that counts.
The verdict
The decision here is about resilience and resources.
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Ethereum’s “grizzled veteran” reputation today stems from surviving numerous shifts in user demand patterns while maintaining a large on-chain capital pool and growing it all the while. Its success or failure in any given crypto market segment is not guaranteed, nor was it in the past, but its constant evolution has ensured that failures are not fatal, and also that missed opportunities aren’t very damaging overall.
XRP, on the other hand, is only just starting to scale up its on-chain capital base; it has only $418 million in stablecoins. Furthermore, while it has succeeded in attracting some financial institutions to its chain, the truth is that its growth trajectory has not yet been seriously tested, and is still finding an appropriate product-market fit. Its real competitive challenges have only just begun.
So if you want a coin to buy with $5,000 and hold forever, pick the asset that can win without needing to be perfect: Ethereum. XRP is still a decent long-term hold, assuming it’s part of a diversified crypto portfolio, but it’s riskier.
