What happened

Shares of Coinbase Global (COIN -3.73%) gained 40.4% in October, according to data from S&P Global Market Intelligence. The cryptocurrency broker followed along as many of its most popular digital tokens posted massive gains. For example, market-leading cryptocurrency Bitcoin (BTC -0.27%) gained 48.7% last month while blockchain-based smart contracts platform Ethereum (ETH 3.32%) posted a 51.4% return.

So what

Both Ethereum and Bitcoin are setting new all-time highs again after a dip in the crypto market that stretched from May to September. Cryptocurrencies are still extremely volatile but the market has taken many steps toward a calmer and more predictable future.

A green charting arrow trending upward on top of several familiar cryptocurrency names, including Ethereum and Bitcoin.

Image source: Getty Images.

The market-boosting improvements include Bitcoin becoming an official currency of El Salvador, regulators in the U.S. and elsewhere considering how to build a regulatory framework around digital assets, and the launch of the first Bitcoin-centric exchange-traded fund. The ProShares Bitcoin Strategy ETF (BITO -3.74%) doesn't own Bitcoin tokens directly, but holds positions in Bitcoin futures. The ETF has gained 7.7% since launching on Oct. 22.

As for Ethereum, that digital asset performed an important technical update to its blockchain network. An Ethereum futures ETF is coming soon and surging interest in Ethereum-based decentralized finance systems is driving a surge in real-world Ether transactions.

All of this is good news for Coinbase. The company charges a fee for every cryptocurrency transaction it manages, so rising trading volume is great news for the company's top and bottom lines. Coinbase's overall trading volume was above average in October and trending even higher in November, according to data from CoinGecko.

Now what

Coinbase's future value depends on wider adoption of cryptocurrencies in general and rising crypto trading activity in the American market in particular. The company is set to report earnings on Tuesday evening, covering the third-quarter period that ended on Oct. 31.

If you're interested in the cryptocurrency market but not ready to take direct positions in any of the individual digital coins, Coinbase can provide a safer middle ground. This stock doesn't depend on the fortunes of any single cryptocurrency, but on the health of the crypto market as a whole. If some better idea comes along to overthrow Bitcoin or Ethereum, Coinbase will happily pocket the trading fees as investors move over to the hot new thing. The greatest risk for Coinbase shareholders -- and I concede that it is a substantial risk -- is that the company would suffer if the whole revolution of cryptocurrency and blockchain assets goes off the rails and never goes truly mainstream.

The gains of October balanced out Coinbase's plunging share prices in the spring, and the stock now sees single-digit positive percentages for the first time since the initial public offering in April. Tuesday's report is likely to spark a large price move in the stock, though the direction of that move remains to be seen. Cautious investors may want to wait for a price dip before taking a position in this richly valued stock, while growth-minded traders could argue that Coinbase might never be this affordable again.