Coinbase Gets ‘Neutral’ Rating From Goldman Sachs as Its US Dominance Swells

Wall Street titan Goldman Sachs has upgraded its rating on publicly traded crypto exchange Coinbase from “Sell” to “Neutral,” simultaneously setting a new price target of $282 for the cryptocurrency exchange’s stock.

The upgrade, announced on Thursday, underscores a marked change in Goldman Sachs’ outlook on Coinbase, prompted by the recent bullish momentum in the cryptocurrency market.

Earlier today blockchain analysis firm Kaiko noted that Coinbase, which has often accounted for less than half of all trading volume in the U.S., has increased its marketshare in the country to 60% since the Securities and Exchange Commission (SEC) approved 11 new spot Bitcoin ETFs to begin trading in January this year.

The revision of COIN’s stock rating reflects a broader, ongoing surge in cryptocurrency prices, which have soared to unprecedented highs.

This rally in the crypto sector has been mirrored by a substantial increase in daily trading volumes on Coinbase, reaching levels not witnessed since 2021. The nearly $5 billion in trading volume Coinbase saw on January 11—the day the Bitcoin ETFs began trading—was higher than the volume it saw on any day in 2023, and came close to rivaling the volume seen by the exchange the day FTX filed for bankruptcy in November 2022, according to BitDegree data.

But during the recent Bitcoin price rallies—which saw BTC set a new all-time high—Coinbase volume was the highest it’s ever been. BitDegree and CoinGecko data agree that Coinbase smashed its old daily volume record and saw close to $12 billion worth of volume on March 6. (Keep in mind, that’s despite the fact that Coinbase has crashed or showed zero balances for users during times of high volatility.)

As part of the revision, Goldman Sachs has now increased its Coinbase revenue forecast by 48% from early February. In mid-February, the San Francisco-based crypto exchange saw its stock price soar after it reported a profit of $273.4 million, compared with a loss of $557 million the same quarter one year ago. In Q3 2023, the exchange had reported a loss of $2 million in profit.

Goldman Sachs’ initial “Sell” rating was rooted in a cautious view of the cryptocurrency market’s long-term prospects. The investment bank has previously expressed concerns over the limited everyday use cases for cryptocurrencies outside of trading, questioning the sustainability of growth for exchanges like Coinbase. However, the recent performance and adoption rates within the crypto market have prompted a reevaluation.

The new price target of $282 marks a departure from Goldman Sachs’ earlier valuation, suggesting a more optimistic short-term outlook for Coinbase amid the current crypto market rally.