Coinbase Global reported a profit of $1.4 billion in the second quarter, a significant increase from $36 million the previous year, largely due to gains from its investment in Circle Internet Group. However, the company's revenue fell short of Wall Street expectations, leading to a 6% drop in its stock during after-hours trading.

Coinbase's stock fell 7% after the company reported disappointing Q2 earnings, posting $1.5 billion in revenue, which was below analysts' expectations of $1.59 billion. The decline in transaction revenue by 39% from the previous quarter reflects the company's vulnerability to crypto market fluctuations, despite its efforts to diversify its offerings.

Mizuho analysts predict shrinking margins for Circle's USDC following Coinbase's Q2 earnings, estimating Circle earned $625 million in total interest income. The analysts highlight increased distribution costs and new partnerships, including with Binance, as factors leading to a bearish outlook for Circle's stock.