Spot Bitcoin ETF Approval: A Winning Scenario for Coinbase - Wedbush

• Coinbase Expected to Gain Advantage from SEC's Approval of Bitcoin ETFs
• Wedbush's View on Coinbase's Future
• Coinbase's Role in ETFs and Anticipated Revenue
• Mizuho Securities' Take on Coinbase's Position

Coinbase Expected to Gain Advantage from SEC's Approval of Bitcoin ETFs

The U.S. Securities and Exchange Commission's (SEC) recent approval of spot bitcoin exchange-traded funds (ETFs) is anticipated to propel crypto exchange Coinbase (COIN) into a favourable position, according to a report published by investment firm Wedbush on Thursday.

Wedbush's View on Coinbase's Future

Wedbush remains optimistic about Coinbase's future, maintaining its outperform rating on the company's stock and increasing its price target from $110 to $180. At the time of the report, Coinbase shares were trading 3% lower at $146.61.

Analysts led by Moshe Katri have predicted that the SEC's bitcoin ETF approvals will significantly enhance Coinbase's future results. This is due to the company's influential role in these ETFs and the unlocking of incremental institutional investment in crypto assets, which currently stands at less than 10%. Recent legal and financial challenges faced by competitors, such as Binance, are also expected to play in Coinbase's favor.

Coinbase's Role in ETFs and Anticipated Revenue

Coinbase is reported to have a dominant role in all but one of the approved ETFs, either as an issuer or custodian. The report suggests that Coinbase's revenue generation will primarily come from custodian fees and other ancillary services. Additional benefits for Coinbase could include the potential to attract more institutional investors, considering less than 10% of hedge funds currently invest in digital assets. Consequently, the number of Coinbase's active institutional accounts is expected to grow.

Mizuho Securities' Take on Coinbase's Position

Contrarily, Mizuho Securities, which holds an underperform rating on Coinbase shares and a $54 price target, has described the spot ETF approval as a pyrrhic victory for COIN. The firm warns that possible revenue gains from bitcoin ETFs might be more limited than anticipated.

Mizuho Securities added that the deeper cannibalization of high-margin spot bitcoin trading and/or share loss to brokers offering ETFs could offset future benefits. The investment bank further raised concerns that fundamentals are likely to serve as a painful reality check in coming quarters.

Edited by Jonathan Stoker