Ethereum Price Surge Predicted to Boost Coinbase's Revenues, According to Bernstein Analysts' Forecasts
Coinbase, the leading cryptocurrency exchange, is set to benefit significantly from the recent surge in Ethereum (ETH) prices. The rise in ETH has boosted Coinbase's revenue in multiple ways, including trading fees, revenue from ETH fees on the Base layer-2 chain, and appreciation of its Ethereum holdings.
The surge in ETH prices has directly boosted Coinbase's balance sheet value due to its large Ethereum holdings. Coinbase currently holds around $590 million worth of Ethereum, making it the 6th-largest corporate holder. With Ethereum's rally, the exchange stands to earn more as prices climb, with ETH staking already making up about 10% of Coinbase's revenue.
Coinbase's trading fees in July increased approximately 40% compared to the Q2 average, due to heavier ETH trading. This trend is expected to continue as rising Ethereum and related tokens are anticipated to boost Coinbase's trading volumes and fees in Q3 and Q4.
The Base App, which allows for easier trading, storage, and sending of crypto, including stablecoin payments, strengthens Coinbase's ties to Ether's rapidly growing ecosystem. Base, a Layer 2 chain on Ethereum, is one of the most active, processing over 9 million transactions daily. All transaction fees on Base are paid in ETH, bringing Coinbase around $75 million in annual revenue.
More companies are expected to adopt an "Ethereum treasury" strategy, buying and staking ETH to boost returns. This trend, coupled with the ongoing crypto bull market, is expected to drive strong growth in ETFs and treasury firms, increasing trading volumes and adoption.
Analysts predict strong Q3 performance for Coinbase, driven by Ethereum's rally and Base chain adoption. Bernstein analysts have pointed out that spot ETH ETFs like BlackRock's ETHA offer a 2.9% staking yield. They forecast strong Q3 growth for Coinbase, with $360 million in July trading revenue (a 40% jump) and $665-$745 million in total service revenue.
Recently, Bernstein increased its target for Coinbase's stock price from $310-$510, reflecting the optimistic outlook for the exchange's future growth. Analysts see a combination of stable liquidity, a favorable macroeconomic environment, and positive regulatory signals driving continued crypto market growth, with Bitcoin benefiting from supportive macroeconomic factors and digital asset demand providing a stable price floor.
If Ethereum's rally continues, Coinbase is well-positioned to be one of the biggest winners. The exchange, already a major player in the crypto market, is likely the biggest winner in this rally due to its strong ties to the Ethereum ecosystem and its large Ethereum holdings.
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