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Good Morning
Coinbase's second consecutive net loss landed this week alongside Kraken's $600M push into Asian stablecoin infrastructure and JPMorgan calling the rotation from gold to bitcoin. The throughline is the same: spot trading is a shrinking business, and every major player knows it.
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In Today's Email:
What Matters: Coinbase Posts $394M Q1 Loss 👀
Founders Highlight: Franklyn Wang of Liquid 👨
Deal Flows: Kraken Acquires Reap for $600M 🐙
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WHAT MATTERS
Coinbase Posts $394M Q1 Loss
State of play: Coinbase reported a $394M net loss in Q1 2026, its second consecutive quarterly loss, as falling crypto prices hammered both trading volumes and its balance sheet holdings.
The exchange posted $1.41B in total revenue, down 31% year-on-year, with transaction revenue falling 40% to $756M.
Coinbase lost $482M on crypto held for investment as Bitcoin dropped from $97K in January to under $70K by quarter-end.
Adjusted EBITDA came in at $303M, down sharply from $930M in Q1 2025.
CEO Brian Armstrong said the company is expanding beyond spot trading into derivatives, commodities, futures, and prediction markets to reduce retail trading dependence.
Stablecoin revenue rose 11% to $305M, a rare bright spot, while the stock fell ~6% in after-hours trading to $182.
Why it matters: Coinbase is the clearest retail crypto proxy. Two consecutive net losses confirm spot-driven revenue is structurally fragile, not just cyclically weak.
Our take: Armstrong's diversification pitch isn't new. Until derivatives and prediction markets visibly shift the revenue mix, this is rebranding, not transformation.
For builders and investors: Stablecoin revenue grew 11% in a down quarter, the only line showing price-agnostic durability. That's where the infrastructure bet is.
BUILDER-INVESTOR HIGHLIGHT
Franklyn Wang of Liquid
Intro: Franklyn Wang is the Founder and CEO of Liquid, a perpetual contract aggregation platform. It has since expanded its offerings to include multi-asset trading across stocks, forex, commodities, and prediction markets
Previous background: Before joining Liquid, Franklyn was a Quantitative Researcher on the Systematic Macro team at Two Sigma.
He studied Math and Computer Science at Harvard, graduating in 2022 with a 4.0. His work sits at the intersection of theoretical CS, machine learning, and microeconomics.
The big idea: Franklyn wants to build a single 24/7 leveraged trading interface for everything: stocks, crypto, commodities, prediction markets, and private secondaries.
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INSIGHTS
JPMorgan analysts say bitcoin is displacing gold as the go-to debasement trade since the Iran conflict, with BTC ETFs posting a third straight month of inflows while gold ETFs are still bleeding.
Bitcoin ETFs have seen inflows for three consecutive months in May, while gold ETFs have yet to recover outflows that began when the Iran conflict started in March.
Institutional positioning is also rising, with JPMorgan's CME bitcoin futures and offshore perps proxies hitting new highs.
Strategy's bitcoin purchases could reach $30B this year at its current pace, with ownership split nearly equally between retail and institutional investors.
DEAL FLOWS
Kraken Acquires Reap for $600M
Deal flows slowed down this week - we saw $150M+ in deals 💼
Kraken parent Payward is acquiring Hong Kong-based stablecoin payments firm Reap Technologies for $600M in cash and stock, marking its first infrastructure deal in Asia and implying a $20B valuation for Payward.
Reap provides cross-border business payments infrastructure connecting traditional finance with digital assets, with a focus on stablecoin-powered settlement.
The deal follows Payward's $550M acquisition of US derivatives platform Bitnomial in April, its second major acquisition in under a month.
Reap was founded by former Stripe Asia-Pacific lead Daren Guo and ex-investment banker Kevin Kang.
Co-CEO Arjun Sethi said Asia is the fastest-growing market outside Europe by both revenue and assets on platform.
Kraken is reportedly about 80% ready for an IPO, with expansion in both Asia and the US as stated priorities.
Deal flows in the past week:
Elastics, $2M Pre-Seed Round
Ekiden, $2M Seed Round
Saturn Credit, $2M Seed Round
Stockcoin.ai, Undisclosed $ Seed Round
OnRe Finance, $5M Series A Round
Astrocade, $56M Series A & B Round
Fun, $72M Series A Round
OpenTrade, $17M Strategic Round
GSR, Undisclosed $ Strategic Round
Centrifuge, Undisclosed $ Strategic Round
WooshPay, Undisclosed $ Strategic Round
Veera, $500K Public Token Sale
Printr, $2M Public Token Sale
QUICK BITES
Coinbase loses nearly $400M in Q1.
Kalshi hits $22B valuation after $1B raise led by Coatue.
Payward to acquire Hong Kong stablecoin firm Reap for $600M.
Coinbase resumes trading after hours of AWS-linked disruption.
South Korea tightens oversight of firms moving crypto overseas.
JPMorgan says bitcoin is gaining over gold as debasement trade.
Spot bitcoin ETFs post five-day inflow streak totaling nearly $1.7B.
ECB's Lagarde flags euro-denominated stablecoins as financial stability risk.
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