Major Crypto Stock Crashed…And No One’s Talking About It!

Last Friday was a busy day.

The Trump administration announced new tariffs on some of our trading partners.

The job report came in very weak, which reopened arguments about interest rates and the state of the economy.

The Dow dropped almost 800 points at one point.

There was a lot going on.

But all the news distracted investors from something you don’t want to miss.

Coinbase (ticker: COIN) released earnings after the market closed on Thursday, and the stock crashed.

Coinbase was down over 16% on Friday!

Coinbase runs the largest cryptocurrency exchange in the United States.

I thought crypto was doing great. So, what happened?

Coinbase reported only a 3% increase in revenue for the 2nd quarter compared to 2024.

Wall Street was expecting revenue to grow almost 10%, so Coinbase missed horribly.

But the bad news was far from over.

Coinbase also reported an adjusted EPS of only $0.12 for the 2nd quarter, a 90% drop compared to 2024.

Wall Street expected $1.51 in adjusted EPS for the 2nd quarter!

When I looked through the earnings release, I found something crazy.

Coinbase changed its definition of adjusted EPS.

Coinbase took out almost $1.5 billion in “gains on strategic investments” from its net income to calculate its adjusted EPS.

The new definition was applied retroactively to 2024, so the adjusted EPS did fall 90%.

But Wall Street analysts didn’t expect Coinbase to change its adjusted EPS definition, so their estimates were way off.

Why did Coinbase take out “gains on strategic investments”?

Coinbase is part-owner of Circle Internet Group (ticker: CRCL), which went public in early July.

Circle’s price skyrocketed over 500% after going public, which made Coinbase a lot of money.

However, Coinbase doesn’t want strategic investments included, and I agree.

Coinbase is in the market for crypto and other exchanges and not an investing firm.

It makes sense for adjusted EPS to exclude money Coinbase made from its investments.

Let’s talk about the 90% drop in adjusted EPS.

The main driver for the drop was charges related to a data breach in May.

The data breach charges are a one-time event and shouldn’t impact later quarters.

So, we should see adjusted earnings rebound for the remainder of 2025.

But here’s the reason I’m really excited about Coinbase.

Last week, Coinbase announced it’s going to release tokenized stocks and prediction markets.

Prediction markets are exploding in popularity around the world, especially in the United States.

Allied Market Research projects prediction markets will grow to 6x their current size by 2032.

And Coinbase will make it a lot easier for users to place bets in those markets.

People love to gamble, and Coinbase will allow people to bet on almost anything.

Plus, don’t forget the crypto market has a huge believer in the White House.

President Trump and his administration are major supporters of crypto.

In July, Trump signed the Genius Act, which requires payment-based stablecoins to be registered with the government.

USDC, a stablecoin run by a partnership between Circle and Coinbase, is expected to grow massively in volume as a result of the legislation.

At the end of day, too many people are ignoring Coinbase’s enormous growth potential.

Coinbase is down from its bad earnings release, but it won’t stay down for long.

Are you buying for the rebound?