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youre right they make money off volume, not price. but volume surges when price goes up and dries up when prices go down. (aka crypto winter)

by ffggvv 4y ago

ineedasername 4y ago
They make money on price too. They have a % fee, so their dollar-denominated revenue for a given trade with the same # of coins but 50% lower dollar-denominated exchange rate is still 50% lower. They pay people in fiat currency, their expenses are denominated in fiat currency. It doesn't matter if they traded 1M bitcoins daily 6 month ago and still trade 1M daily today, their dollar-denominated fees on that trade has plummeted.
- ffggvv 4y ago
  happy to be proven wrong but i think most investors say “i have 10k, i want to buy as much bitcoin as that buys me.” rather than “i wanna buy 1 bitcoin, regardless of price”. atleast that’s how i think of things. in terms of dollars invested. not coins desired. same with stocks. i say i wanna 5k in Coke stock, not 121 shares.
  - ineedasername 4y ago
    Yes, you're not completely wrong, but there will be fewer people saying "I have $10k." In the current market conditions. That's only part of the trading though. Volatility isn't measured in that way either, so as volatility goes down-- or stays the same as coin prices go down-- Coinbase still loses money. It's usually measure in the % of the coin traded. So volatility could remain stable at, say, 2% but when the dollar denominated market cap is 50% lower than it was 6 months ago then Coinbase is collecting 50% less in fees. In order for revenue to remain the same, volatility would have to double. People that had $10k invested already and kept it in the market now have much less than $10k. They may still have 10 ETH depending on when they bought in, but when they trade those ETH Coinbase is making 75% lower in fees than if they traded them 12 months ago. Coinbase simply cannot make the same revenue in dollar denominated fees when the dollar denominated value of those trades goes down, and it has gone down a lot.
    - ffggvv 4y ago
      that’s true, volume driven by money already in the system will fall due to prices going down. volume driven by new money coming in will be reduced by the phenomenon i mentioned (price down, less hype, less money coming in). So if we break volume down in 2 groups the first would experience what you’re saying and the second would experience what i’m saying. It’s the same with stocks but to a much lesser extent, especially because 401ks and institutions are required to buy no matter what Not sure what percent of volume is each case.

youre right they make money off volume, not price. but volume surges when price goes up and dries up when prices go down. (aka crypto winter)

by ffggvv 4y ago

youre right they make money off volume, not price. but volume surges when price goes up and dries up when prices go down. (aka crypto winter)

ineedasername 4y ago

They make money on price too. They have a % fee, so their dollar-denominated revenue for a given trade with the same # of coins but 50% lower dollar-denominated exchange rate is still 50% lower. They pay people in fiat currency, their expenses are denominated in fiat currency. It doesn't matter if they traded 1M bitcoins daily 6 month ago and still trade 1M daily today, their dollar-denominated fees on that trade has plummeted.

ffggvv 4y ago
happy to be proven wrong but i think most investors say “i have 10k, i want to buy as much bitcoin as that buys me.” rather than “i wanna buy 1 bitcoin, regardless of price”. atleast that’s how i think of things. in terms of dollars invested. not coins desired. same with stocks. i say i wanna 5k in Coke stock, not 121 shares.
- ineedasername 4y ago
  Yes, you're not completely wrong, but there will be fewer people saying "I have $10k." In the current market conditions. That's only part of the trading though. Volatility isn't measured in that way either, so as volatility goes down-- or stays the same as coin prices go down-- Coinbase still loses money. It's usually measure in the % of the coin traded. So volatility could remain stable at, say, 2% but when the dollar denominated market cap is 50% lower than it was 6 months ago then Coinbase is collecting 50% less in fees. In order for revenue to remain the same, volatility would have to double. People that had $10k invested already and kept it in the market now have much less than $10k. They may still have 10 ETH depending on when they bought in, but when they trade those ETH Coinbase is making 75% lower in fees than if they traded them 12 months ago. Coinbase simply cannot make the same revenue in dollar denominated fees when the dollar denominated value of those trades goes down, and it has gone down a lot.
  - ffggvv 4y ago
    that’s true, volume driven by money already in the system will fall due to prices going down. volume driven by new money coming in will be reduced by the phenomenon i mentioned (price down, less hype, less money coming in). So if we break volume down in 2 groups the first would experience what you’re saying and the second would experience what i’m saying. It’s the same with stocks but to a much lesser extent, especially because 401ks and institutions are required to buy no matter what Not sure what percent of volume is each case.