(Bloomberg) -- Coinbase Global Inc. posted a profit for the first time in two years after a fourth-quarter rebound in digital-asset markets lifted trading revenue, sending the shares of the largest US cryptocurrency exchange higher. 

Revenue jumped 51% to $953.8 million, topping the $826 million average estimate of analysts surveyed by Bloomberg. Net income was $273 million, or $1.04 a share, compared with a loss of $557 million, or $2.46, a year earlier, Coinbase said in a shareholder letter Thursday. Analysts had forecast a loss. 

Consumer transaction revenue jumped to $492.5 million, nearly doubled from the third quarter, while institutional transaction revenue more than doubled quarter-over-quarter to $36.7 million. 

“Coinbase was widely perceived to be an unprofitable company, and this quarter can start changing the image going forward,” said Owen Lau, an analyst at Oppenheimer & Co. who has an “outperform” rating on the stock. “I think the next step is to see if Coinbase can maintain profitability for the full year.”

Wall Street has been watching Coinbase for signs that the array of newly launched US exchange-traded funds investing directly into Bitcoin may cannibalize some of Coinbase’s retail revenue. The exchange makes more money off retail users than from institutions.

Coinbase’s shares rose more than 15% in premarket trading on Friday. The stock surged almost fivefold last year, after tumbling 86% in 2022. 

In the letter, Coinbase cited “excitement” around Bitcoin spot ETF approvals and broad expectations around improving macro conditions in 2024 as reasons for the sharp increase in crypto volatility in the fourth quarter. 

Investors are also watching the impact of the ETFs on Coinbase’s custodial fee revenue, which increased to $19.7 million in the fourth quarter. Coinbase serves as a custodian for eight of the 10 spot Bitcoin ETFs, and as these funds gain funds, should benefit from growth in these fees. 

With institutional business picking up, loans to institutional clients increased to $399 million at the end of fourth quarter, the company said. 

Alesia Haas, chief financial officer of Coinbase, said in an interview that the firm plans a “modest increase” in headcount to support product growth. The company sees a positive impact from the Bitcoin ETFs across the industry through “elevated engagement,” she said.  

(Adds premarket trading.)

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