Crypto Exchanges Are ‘Over-Earning’ From Retail Investors, Expect Trading Fees To Fall: Bernstein Analyst

Research firm AllianceBernstein is concluding that crypto trading fees on exchanges are too high, but believes the charges will fall over time.

In an interview with CNBC, Bernstein analyst Harshita Rawat states that, by tracking the value of fees accrued by traditional stock market exchanges, it can be deduced that trading fees in the sector decreased over the last twenty years. Rawat predicts that the same phenomenon will occur in the crypto trading sector.


“Right now, retail crypto trading, if you look at the fees there, I do believe that’s it’s over-earning as an industry. If you look at stock brokerages, how the commissions there came down in the last two decades, I do think that we are going to see that with retail crypto trading… So crypto is here to stay, but the trading fees will compress over time.”

The Bernstein analyst cites the example of cryptocurrency exchange Coinbase which she says is making bank from the trading fees charged to its retail users.

“Retail crypto trading is their [Coinbase] bread and butter and we believe they are over-earning…

The fact that 90% plus of their revenue comes from retail-crypto trading means that it needs to be valued as an exchange or brokerage.”

Bernstein has initiated coverage on the Coinbase (COIN) stock and assigned a $250 price target. At time of writing, COIN is trading at $265.

Rawat points out that even as crypto trading fees fall, the cryptocurrency markets will record increased trading volumes and a higher market cap over the long run.

“Over the long term, the crypto market cap should continue to grow and trading volume should also be somewhat elevated because of the 24/7 architecture of trading the assets… In the near term though, it’s going to be volatile.”

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