Coinbase is set to be the biggest beneficiary of Ethereum’s recent rally, with Wall Street broker Bernstein pointing to the crypto exchange’s deep alignment with the blockchain’s expanding ecosystem.
The research note, published Monday, came as ether (ETH) surged to its highest levels since 2021, fueled by renewed investor interest and a broader altcoin rally.
ETH has gained 80% since June 5, when stablecoin issuer Circle launched its blockbuster IPO, a move, Bernstein analysts say, heightened market awareness that most stablecoins are issued on Ethereum.
On Friday, ETH touched $4,000 for the first time in eight months, briefly trading above $4,350 on Monday before pulling back to around $4,186. Despite the rally, the token remains about 14% below its November 2021 record high of roughly $4,878.
“In crypto lingo, this market structure is called the ‘alt rally,’ i.e., when digital assets other than bitcoin rally stronger relative to bitcoin,” Bernstein analyst Gautam Chhugani shared. “We believe the alt rally has commenced (reflected in recent ETH outperformance) and Coinbase will be the biggest beneficiary, given its long list of 250+ tokens listed and now the long-tail of Base chain tokens integrated in the Coinbase App.”
Base, Coinbase’s Ethereum Layer 2 network, handles more than nine million transactions daily, ranging from stablecoin transfers to financial applications and consumer services. Gas fees are settled in ETH, generating an estimated $75 million in annual sequencer fees for Coinbase.
The company also earns brokerage fees through its integration of Base tokens into its main exchange and from its recently launched Base App, which allows buying, selling, holding, and transferring crypto.
Coinbase’s staking activity, predominantly ETH, accounts for 10% of its total revenue and could increase alongside higher asset prices, Bernstein said. The firm also holds a substantial ether treasury of 136,782 ETH, worth about $570 million at current prices.
Apart from Coinbase, other public companies aligned with Ethereum stand to gain as well. Bernstein cited Robinhood, which has expanded to more than 30 listed tokens, added Ethereum staking, and launched Robinhood Chain, a Layer 2 network for asset tokenization. Circle, whose USDC stablecoin has over 60% of its supply on Ethereum, is another potential beneficiary.
Bernstein maintains an outperform rating on Coinbase stock with a $510 price target, noting that Q3 and Q4 could see strong trading volumes if ETH and related tokens continue their upward trajectory. Meanwhile, Coinbase shares were up 4% Monday, trading near $323.
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