Coinbase Global (COIN) operates the largest cryptocurrency platform in the United States, supporting over 200 digital assets like Ethereum and Bitcoin. The company handles the most trading volume of any US-based exchange platform and offers consumers its primary account for the crypto economy, as well as an institutional full-service prime brokerage platform. With higher transaction volumes as more of the public adopts crypto, Coinbase is well-positioned to capitalize on the burgeoning crypto economy.
The GENIUS Act, a landmark legislation that will seek to regulate the burgeoning stablecoin market in the US, recently passed the US Senate in a bipartisan manner and is expected to pass when it moves to the US House of Representatives. If and when the act passes, it will lend credibility to the market, drive institutional demand, and spur adoptions from ordinary crypto users.
Stablecoins are digital assets that are built to maintain a stable value relative to a relatively “stable” asset like the US dollar. Though Coinbase’s stablecoin business is often overlooked by Wall Street investors and analysts, it is rapidly becoming an integral part of its booming business. In Q1, stablecoin revenue from the USDC stablecoin, the second-largest stablecoin in the world, shot to roughly $300 million, comprising ~15% of the company’s total revenue.
Stablecoins allow users to send money faster and cheaper and provide more ease for international transactions. In addition, stablecoin holders can ‘stake’ their holdings to earn rewards on their stablecoins without trading. Last year, stablecoins went mainstream and were responsible for more than two times the transaction volume of credit card juggernaut Visa (V). Meanwhile, Tether, the company behind the USDT stablecoin, is the most profitable company in the world per employee, generating $14 billion in profit last year with only 150 employees.
Coinbase is partnered with stablecoin operator Circle Internet Group (CRCL) and receives half the revenue generated from USDC. CRCL is one of the hottest IPOs this year, with shares more than doubling since its debut last month. However, investors may want to pay close attention to a major market dislocation. Though Circle derives all its revenue from USDC, USDC revenue only represents 14% of COIN’s business. Nevertheless, CRCL currently enjoys a market cap of ~$50 billion while COIN’s is only $87 billion. In other words, investors are vastly undervaluing Coinbase’s core crypto exchange business.
COIN shares are on the precipice of emerging from a year-long base structure. As the old Wall Street adage goes, “The longer the base, the higher in space.” The Fibonacci extension levels agree and suggest that if the breakout is successful, COIN could be a $500 stock in 2026. In addition, the massive volume “skyscrapers” suggest that institutional investors are rushing to buy shares.
Beyond the wonderful price action and the stablecoin catalyst, Coinbase offers investors a sparkling clean balance sheet. The company’s cash hoard has grown consistently and has swelled to nearly $10 billion.
In conclusion, Coinbase, the leading crypto exchange, is poised to capitalize on the burgeoning crypto economy, driven by increasing adoption and the often overlooked yet rapidly growing stablecoin business. With a strong technical outlook and a healthy balance sheet, COIN is an attractive investment opportunity for long-term investors.
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This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research
Coinbase's stablecoin business could be a game-changer in the world of finance, yet Wall Street appears to resent it by being late at table rather than embracing its potential.
