Several Wall Street firms lowered their forecasts ahead of Coinbase's Q2 earnings release, citing a significant slowdown in cryptocurrency spot trading in April and May. More than single-quarter data, the market is focused on management's assessment of the second half of the year and whether U.S. digital asset legislation will progress.

Overall trading activity in the industry declined during the second quarter. The average quarterly price of Bitcoin and Ethereum was lower than the previous quarter, and retail investor participation was also weak. The report noted that Bitcoin fell by approximately 14% and Ethereum by approximately 25% during the quarter. Although there was some improvement in June, most analysts believe it is insufficient to reverse the weak performance of the previous two months.

Several institutions have lowered their trading volume forecasts.

Barclays, Benchmark, Clear Street, and Compass Point all lowered their forecasts ahead of their earnings reports, primarily due to lower-than-expected spot trading volumes.

Barclays projects Coinbase's second-quarter trading volume at approximately $152 billion, below the market consensus of around $178 billion, and expects adjusted EBITDA to be about 3% lower than the consensus forecast. The firm believes that both on-chain rewards and institutional trading revenue are weak.

Clear Street expects quarterly transaction volume to be approximately $160 billion, with adjusted EBITDA of approximately $301 million, primarily reflecting weaker-than-expected retail transactions. Benchmark also lowered its EBITDA forecast to $377 million. Compass Point believes that revenue may be slightly below market expectations, but EBITDA is roughly in line with consensus estimates.

Subscription and service revenue provide a buffer

Analysts are relatively more optimistic about subscription and service revenue. This segment includes USDC interest income, staking rewards, custody fees, Coinbase One subscriptions, and institutional services. Because this type of revenue has a low correlation with daily trading volume, it is seen as an important buffer for the quarter.

Benchmark believes this revenue stream can provide support when trading activity weakens. Barclays expects this revenue to fall near the lower end of Coinbase's guidance range due to weaker crypto asset prices and moderate USDC balance growth. Compass Point is more cautious, believing that slower stablecoin growth and lower prices could cause this revenue to fall below the company's midpoint guidance.

New business and legislative progress are the focus of attention.

Beyond financial figures, the market is also watching the progress of Coinbase's new businesses. The market has recently seen rapid growth due to increased trading activity related to sports events. Barclays believes this business is gradually becoming a more meaningful revenue contributor. Clear Street also lists it as one of its long-term growth areas.

However, some institutions have reservations about the profitability of this business. Compass Point points out that Coinbase records total revenue, but it needs to share it with Kalshi, so the net contribution may be lower than the surface figures.

Derivatives are also a key focus. Coinbase's international perpetual contracts business, and its acquisition of Deribit, have given it access to a larger global market than spot trading. Most analysts believe this will be a long-term growth driver, but it wasn't enough to offset the impact of weak spot trading in the second quarter.

Another major variable comes from Washington. If the U.S. Clarity Act progresses, it will establish a clearer regulatory framework for digital assets. Benchmark believes recent progress on ethics clauses has increased the likelihood of the bill passing the Senate. Barclays, however, cautions that the legislative schedule remains tight, and other issues could continue to delay the bill. Compass Point is the most cautious, believing that if legislation stalls, Coinbase's valuation could face pressure.

Therefore, investors are more likely to focus on three aspects: third-quarter guidance, progress on layoffs and cost control, and whether the company can continue to reduce its reliance on the retail spot trading cycle.