Coinbase reported a $667 million net loss for the fourth quarter of 2025, marking its first quarter of losses since 2023. This decline was primarily driven by non-cash write-downs on its crypto holdings and strategic investments, falling significantly short of analyst predictions and reversing a profit of $1.3 billion from the previous year’s same quarter.

Record Growth Metrics Masked by Portfolio Pain

The shareholder letter released post-market hours painted contrasting views of 2025 performance. Operationally, Coinbase experienced a historic peak with a trading volume of $5.2 trillion, an increase of 156% year-over-year.

However, its revenue for the fourth quarter dropped 21.6% year-on-year to $1.78 billion, failing to meet the consensus estimate of approximately $1.83 billion. Transaction revenue, a core component of its earnings, plummeted 36% from the previous Q4 to just $983 million. Adjusted earnings per share of $0.66 also disappointed market expectations.

The chief factor for the General Accepted Accounting Principles (GAAP) loss was a $718 million unrealized markdown on the exchange’s crypto investments, tied to declines in Bitcoin (BTC) and other tokens during Q4.

Coinbase additionally suffered a $395 million loss on strategic investments, including its interest in Circle, which saw a value decrease of about 40% from the third to the fourth quarter. Despite these challenges, the company finished the year with $11.3 billion in cash and cash equivalents.

Market Share Gains Face New Competitive Pressure

Recent analytics indicate Coinbase is encountering intensified competition. The decentralized derivatives platform Hyperliquid reported handling $2.6 trillion in trading volume, outpacing Coinbase’s $1.4 trillion in the same timeframe.

Although Coinbase has enjoyed a year of substantial developments, including joining the S&P 500 and securing regulatory approval to operate in the European Union, critiques remain regarding user safety, particularly highlighted by security expert Taylor Monahan amid allegations of considerable preventable losses during 2025.

The company maintains its focus on diversifying beyond merely spot trading, aspiring to create an “Everything Exchange” that encompasses derivatives and equities. The viability of this strategy in the face of volatile crypto prices will become evident in subsequent quarters.