Oppenheimer’s research report suggests that Coinbase (COIN) stands to gain from the long-term adoption of blockchain technology. Analysts at Oppenheimer have increased their earnings estimates for the crypto exchange, predicting that COIN’s 1Q24 trading volume could see significant growth. The analysts attribute this increase to the continued adoption of digital assets following the approval of spot bitcoin (BTC) exchange-traded funds (ETFs) in January.
The report highlights the growing liquidity in the digital asset space, with the average market cap of USD Coin (USDC) rising. USDC is a stablecoin issued by Circle, which is backed by Coinbase. This has contributed to Coinbase’s improving outlook, as the company earns interest income on USDC outstanding balances.
As a result of these factors, Oppenheimer has raised its price target for Coinbase stock to $276 from $200. At the time of publication, the stock was trading 2.5% higher at $258. While Coinbase has seen strong momentum since January and outperformed the S&P 500 index, there are potential headwinds investors should be aware of.
Despite the positive long-term outlook for blockchain technology adoption, there are risks involved. The approval of a spot ether (ETH) ETF is unlikely to happen as previously expected, which could negatively impact near-term volatility. Investors should remain cautious about these potential headwinds but continue to be positive about the long-term potential for Coinbase and blockchain technology.
