Coinbase top-tier access hits a 12-month minimal point
In a recent analysis, CryptoQuant analyst Burak Keshmechi has highlighted that the 12-month low of Coinbase Premium, observed by early 2025, was primarily driven by softer trading market conditions, declining institutional trading, and fee compression.
The Coinbase Premium, a measure of the difference between the price of Bitcoin on Coinbase and the national average, has been at a low of -0.237 as of early 2025. This is a decline from the previous low of -0.2, recorded on October 25, 2021.
The drop in the Coinbase Premium can be attributed to a 10.5% drop in total trading volume quarter-over-quarter, despite a year-over-year increase. This highlights volatility and weakness in trading demand. Additionally, declining institutional trading activity, which historically contributes significant fees and premium to Coinbase's earnings, has reduced overall premium levels.
Increased operating expenses by over 50% year-over-year, due to ongoing heavy investments in growth areas, may have pressured margins. Market sentiment, as reflected by Coinbase's shares hitting a low, was partly due to weaker trading activity and lower adjusted profits for Q2 2025.
Despite steady growth in subscription and services revenue, largely from stablecoin-related income, they were insufficient to offset the premium decline caused by subdued market trading conditions and institutional slowdown.
The low market liquidity, contributing to the observed trends in the Coinbase Premium, indicates ongoing caution among U.S. investors. This caution is also reflected in the drop in Bitcoin's price to $91,500, which may have further contributed to the decline in the Coinbase Premium.
Interestingly, the psychological $100,000 mark did not significantly impact the selling pressure on Bitcoin. According to CoinGecko, the leading cryptocurrency's price was not affected by the selling pressure from the investors identified by the previous CryptoQuant contributor.
Improved macroeconomic conditions and renewed institutional activity may be necessary for the market to regain momentum. Keshmechi's analysis aligns with broader market data, suggesting that the 12-month low of Coinbase Premium was a consequence of subdued crypto market activity, especially among institutions, fee compression, and rising costs amid a challenging trading environment.
The decline in the Coinbase Premium, a measure indicative of Bitcoin's trading activity, can be linked to reduced institutional trading activity and harsh market conditions, both factors contributing to a drop in overall premium levels and fee compression. Furthermore, this slowdown in Bitcoin's finance sector, fueled by weaker institutional trade and lower trading volume, might be a sign of caution among U.S. investors, as reflected in the low liquidity of the market, which is closely associated with technology innovations in this field.
