eToro's cryptocurrency revenue in the first quarter fell to $2.15 billion

eToro reported a sharp drop in cryptocurrency revenue from $3.5 billion to $2.15 billion in the first quarter of 2026 compared to the same period last year; however, the Israeli trading platform achieved a record net profit of $82 million, a 37% increase year-over-year.

5/13/20264 min read

The title obscures the true story.

The $1.35 billion drop in cryptocurrency revenue might seem catastrophic at first glance, suggesting eToro is facing existential challenges from gloomy cryptocurrency market conditions. However, the reported figure represents total revenue, and eToro revealed revenue expenses from cryptocurrency assets totaling $2.17 billion in the same quarter. Net profit margins from cryptocurrency trading were essentially zero, with the company losing approximately $18 million compared to a $28 million loss in Q1 2025. In other words, cryptocurrency revenue decreased, but losses from cryptocurrency trading also decreased.

This accounting method means that the total cryptocurrency revenue figure reflects the total notional value of cryptocurrency transactions processed, not the profit eToro actually earns from facilitating those transactions. When costs nearly equal revenue on a total basis, reducing volume actually improves economic efficiency if it reduces the loss per transaction. eToro's cryptocurrency business generates huge revenue while contributing almost negligible amounts to profit, raising questions about whether the platform's previous cryptocurrency growth was sustainable or desirable from a shareholder perspective.

The overall financial picture tells a completely different story. Net profit, eToro's preferred metric for profitability (excluding cryptocurrency clearing costs and interest margins), rose 19% year-over-year to $258 million. Adjusted EBITDA surged 35% to $109 million, delivering a 42% return on investment compared to 37% year earlier. Funded accounts increased 12% to 4.02 million users, and assets under management rose 15% to $17 billion. By every measure except gross cryptocurrency revenue, eToro solidified its business in a quarter marked by industry-wide cryptocurrency activity declines.

Commodity trading is booming as cryptocurrency traders seek new opportunities.

The most notable story in Q1 was the growth in commodity trading, which increased from 16% of total transaction fees in Q2 2025 to 60% in Q1 2026, with trading volume nearly quadrupling compared to the same period last year. Net contributions from capital market trading, including stocks, commodities, and currencies, surged 71% to a record $166 million. This growth is not random or temporary but reflects the ongoing shift of users from cryptocurrency speculation to commodity markets experiencing significant volatility and numerous trading opportunities.

Gold, oil, and agricultural commodities all saw significant price volatility in Q1 2026 as geopolitical tensions, inflation concerns, and supply disruptions created volatile conditions that attracted active traders. eToro's decision to roll out 24/7 trading for a number of commodities, stocks, and indices this quarter proved timely, allowing users to react to overnight developments in commodity markets that traditional brokers with limited trading hours couldn't accommodate. The ability to trade gold futures at 3 AM or oil futures during Asian trading hours differentiated eToro's service and attracted traders who would otherwise have switched to competitors.

The shift from cryptocurrencies to commodities is understandable from a trader's psychological perspective. Users attracted by the volatility and 24/7 market access of cryptocurrencies have found similar characteristics in the highly volatile commodity market. Instead of losing those users entirely when cryptocurrencies cooled down, eToro retained them by offering alternative markets with comparable appeal but backed by physical assets rather than just digital tokens. The cross-selling of products within eToro's multi-asset platform demonstrates the strategic value of diversification that pure cryptocurrency exchanges lack.

Capital market trading activity totaled 243 million transactions in Q1 2026, an 81% increase year-on-year, while cryptocurrency trading decreased by 50% to 10 million from 20 million. The ten-to-one ratio between capital market and cryptocurrency trading illustrates how radically user behavior has shifted. Even users who still maintain some cryptocurrency positions reduced their trading frequency, suggesting a lack of confidence in short-term cryptocurrency opportunities. Meanwhile, these same users remained active in trading commodities and stocks, indicating they haven't completely abandoned trading but rather reallocated their attention and capital to what they perceive as better opportunities.

Future significance and strategic positioning

eToro's Q1 results reaffirm the multi-asset platform strategy that management has emphasized since its listing. The ability to sustain growth and profitability despite a 38% drop in cryptocurrency revenue demonstrates resilience unmatched by purely cryptocurrency exchanges. As cryptocurrencies undoubtedly recover, eToro will benefit from the platform's renewed involvement in this segment, while maintaining the commodity and capital market infrastructure that sustained the business during the downturn.

The company's $1.3 billion cash position and strong balance sheet provide the flexibility to continue strategic investments regardless of short-term revenue structures. Management's decision to complete the Zengo acquisition and launch a cryptocurrency trading platform in New York during a recession demonstrates confidence that cryptocurrencies represent a long-term growth opportunity despite current challenges. These moves also create barriers for competitors lacking capital or regulatory approval to make similar investments.

Looking ahead, eToro faces the question of whether commodity trading can maintain its high contribution as cryptocurrencies recover. The ideal scenario is for both revenue streams to grow simultaneously, with users maintaining commodity positions while increasing their exposure to cryptocurrencies as market conditions improve. The risk lies in the fact that commodity trading is cyclical and will revert to average levels if volatility normalizes, potentially leaving eToro dependent on cryptocurrency recovery to sustain growth.

The stock market reaction was mixed, with shares falling 7.46% in pre-market trading despite better-than-expected earnings results. Investors appeared more focused on the decline in cryptocurrency revenue than on strong overall earnings and growth indicators. Analyst price targets ranged from $35 to $85, reflecting significant disagreement over whether eToro's diversification strategy would create sustainable value or simply delay addressing structural challenges in its retail trading operations.

The Q1 results show that eToro successfully navigated the cryptocurrency downturn through diversification and efficient operations. Whether that success translates into long-term value depends on maintaining the momentum of its commodity offerings, capitalizing on the eventual cryptocurrency recovery, and continuing to innovate across its multi-asset platform. Currently, the company has demonstrated that betting everything on cryptocurrency was never its strategy, and its flexibility has proven beneficial as market conditions change.

Disclaimer: The information presented in this article is the author's personal opinion in the field of cryptocurrencies. This is not financial or investment advice at all. Every investment decision should be based on careful consideration of your personal portfolio and risk tolerance. The opinion in the article does not represent the official position of the platform. We recommend that readers do their own research and consult experts before making any investment decisions.

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