Coinbase (COIN) is more than simply a cryptocurrency exchange, and momentum in its auxiliary businesses is growing, according to a research note released on Thursday by JMP Securities.
“We still estimate material growth opportunities in the exchange business as the market matures, with rising prices generally correlating with activity,” analysts led by Devin Ryan wrote.
JMP reports that Coinbase’s daily spot trading volume in the first quarter averaged $3.3 billion, more than double from the fourth quarter last year.The newly announced derivatives platform is also “scaling at a tremendous pace.”
“Still, relative to the growth opportunity in the exchange and custody offerings, we see a just as exciting of an opportunity in the development of blockchain use cases today and expect Coinbase to participate in much of that continued evolution,” the authors wrote.
According to the report, these opportunities include participation in the tokenization of real-world assets, such as its recently announced partnership with Blackrock (BLK), payment activities such as its collaboration with stablecoin issuer Circle, Web3 development and decentralized apps (dapps), and staking.According to the analysis, Coinbase can participate in much of the sector’s future growth and innovation by collaborating other TradFi firms interested in getting involved with digital assets rather than competing with them.
The broker continues to see spot bitcoin exchange-traded fund (ETF) adoption as a significant catalyst for the market, however, “ETF flows will not come on a smooth line, particularly with some transitory selling related to GBTC.”
It estimates that approximately $25 trillion in capital connected with traditional wealth management has yet to reach the market in large numbers, but it remains positive about the possibility.JMP rates Coinbase shares as market outperform, with a target price of $300.The stock closed at $262 on Thursday.