Coinbase (COIN) is expected to report strong revenue numbers on Thursday when it reports fourth-quarter earnings after the bell.

Analysts predict a strong quarter for the crypto exchange as trading volume had picked up in the final days of the year.

FactSet consensus estimates Coinbase’s revenue increased to $826.1 million from $674.1 million in the previous quarter. Trading volume and earnings per share (EPS) are also expected to have picked up.

Crypto exchange Coinbase (COIN) is expected to report stronger earnings and revenue when it reports its fourth-quarter results on Thursday due to increased trading volume as the broader market rallied during the quarter.

“We expect Q4 to be a strong quarter for the company as volumes returned to the space and interest income held up,” said investment bank Needham’s analyst John Todaro, who has a buy rating on the stock.

The higher trading volume won’t likely be a surprise as the digital currency market saw a recovery in prices during the fourth quarter, buoyed by spot bitcoin (BTC) exchange-traded funds (ETFs) getting approved to trade in the U.S.

The trend is already apparent from Coinbase’s trading platform peer Robinhood’s earnings, which reported a 10% increase in crypto revenue in the fourth quarter. Traders could see a similar result for Coinbase, which generates most of its revenue from trading fees.

Compass Point’s Chase White, who has a buy rating and expects $895 million in revenue with a $200 price target for 2024, said: “We expect Q4 to be the strongest in terms of revenue and adjusted EBITDA since the first quarter of 2022.”

FactSet consensus estimates predict Coinbase’s revenue to have increased to $826.1 million from $674.1 million in the previous quarter. Trading volume is also expected to be higher at $142.7 billion versus $76 billion in the third quarter. The analysts expect the exchange to report fourth-quarter earnings per share of $0.02, compared to a loss of $0.01 per share in the previous quarter.

However, despite expecting more robust fourth-quarter numbers, analysts are voicing mixed opinions about the benefits of Coinbase’s strong involvement in the spot bitcoin ETFs.

One analyst noted that the company’s custodial service for eight of the ten spot bitcoin exchange-traded funds (ETFs) could be negative for the crypto exchange in the future.

“The big hope for Coinbase heading into 2024 was that more Bitcoin ETF AUM would drive increased spot trading,” Mizuho analyst Dan Dolev, who has an underweight rating and predicts revenue to come in at $944 million with a $60 price target for 2024, wrote in a note.

He points out that outflows from ETFs – driven by Grayscale’s Bitcoin Trust (GBTC) – outpaced the inflows for the funds that Coinbase provides custodial services for, dragging down Coinbase’s ETF-related assets under management (AUM). In addition, spot volumes on the exchange have slowed after the initial excitement surrounding the ETF launch, Dolev said.

On the other hand, Devin Ryan, Director of Financial Technology Research at Citizens JMP, said the ETFs have a bigger impact than many appreciate as they are driving more interest in the space and extend well beyond the price of bitcoin.

Needham’s John Todaro shares that take, saying that despite the launch of the bitcoin ETFs, he does not see Coinbase lowering trading fees on the exchange. “Their market share is more protected than many on Wall Street think,” he said.

Ryan also noted that Coinbase’s recently launched offshore derivatives exchange is bringing in significant volume, which is a big deal. “This matters because the derivatives market is much larger than the spot market currently, so the potential here is significant.”

He noted traders should look for guidance on expenses, which will be an important metric going forward as the company continues to invest.

The shares of the crypto exchange rose about 13% on Thursday, while most crypto-linked stocks rallied as bitcoin price climbed past $51,000.

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