Wall Street’s perception of cryptocurrencies continues to improve, and Coinbase Global (NASDAQ: COIN) is increasingly seen as one of the best-positioned companies to benefit from the trend.
Analysts at Rothschild & Co Redburn upgraded Coinbase shares to Buy from Neutral in a note published Friday, raising their price target to $417 from $325.
The firm highlighted Coinbase’s diversification away from its reliance on retail trading fees and its expansion into institutional services, derivatives, and stablecoin partnerships.
Shares of Coinbase closed Thursday with a five-day winning streak that had lifted the stock 21% in that span. Year-to-date, Coinbase has gained 50%.
In premarket trading on Friday, the shares were down 0.2%.
From trading fees to diversified revenue
Since going public in 2021, Coinbase’s share price has been closely tied to the price of Bitcoin, a correlation that made sense when roughly 90% of the company’s revenue came from retail trading fees between 2019 and 2021.
Today, however, transaction fees account for about 50% of revenue, according to Redburn.
The decline in reliance on per-trade commissions reflects Coinbase’s strategic pivot toward diversification.
While the per-trade rate may decline, analysts argue that higher trading volumes and broader institutional adoption should cushion the impact.
The company’s $2.9 billion acquisition of crypto options exchange Deribit is also expected to boost its derivatives business.
Beyond trading, Coinbase has grown its subscriptions and services segment.
Its agreement with Circle Internet Group to distribute USD Coin (USDC), the second-largest dollar-backed stablecoin, has provided a steady revenue stream through USDC reserve income since 2022.
This source of income is expected to expand further by 2026, Redburn estimated.
Institutional partnerships strengthen business model
Coinbase is also benefiting from its role as a custodian and infrastructure provider to institutional investors.
Redburn noted that the company already provides blockchain services to more than 200 financial institutions.
The analysts described Coinbase as “a well-balanced play on broader digital asset adoption,” citing growing institutional interest and the increasing integration of cryptocurrencies into traditional finance.
The approval of spot Bitcoin and Ether exchange-traded funds (ETFs) in the United States in 2024 marked another milestone for the sector, helping to accelerate institutional participation.
Redburn believes that this dynamic, combined with emerging real-world use cases for digital assets and continued retail engagement, will support long-term growth for Coinbase.
Mixed Wall Street views
Despite Redburn’s bullish stance, Wall Street analysts remain divided on Coinbase’s prospects.
Of the 38 analysts surveyed by FactSet, 17 rate the stock a Buy or equivalent, 17 recommend Hold, and four maintain Sell ratings.
Similarly, data from LSEG shows 18 analysts with Buy or Strong Buy ratings, while 15 advise clients to hold.
Even so, Coinbase has surprised the market with the resilience of its retail trading business.
According to Redburn, the company’s retail take rate has consistently averaged around 1.5%, despite competitive pressures from other crypto exchanges.
Coinbase shares have surged 128% over the past year, underscoring strong momentum as cryptocurrencies gain legitimacy on Wall Street.
For Redburn, the company’s ability to balance retail strength with institutional growth underpins the upgraded outlook and the raised price target.
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