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Coinbase Stock Rises 5% After $2.9 Billion Deal To Acquire Deribit

One of the world’s largest cryptocurrency exchanges, Coinbase, announced on Thursday that it has agreed to acquire Dubai-based crypto derivatives exchange Deribit, for $2.9 billion, marking the largest deal in the crypto sector to date.

Coinbase Expands Global Reach With Deribit

The acquisition, announced on Thursday, involves a substantial financial commitment, with $700 million in cash and 11 million shares of Coinbase Class A common stock as part of the deal. 

The transaction is anticipated to close by the end of the year, a timeline that has already positively impacted Coinbase’s stock, with shares rising more than 5% toward the $206 mark following the announcement.

Coinbase

Greg Tusar, Coinbase’s vice president of institutional product, emphasized the strategic importance of the deal, stating that it enhances Coinbase’s ability to compete with major players like Binance. 

While Coinbase dominates the US market for cryptocurrency trading, it has historically held a smaller share in the global arena, where a significant portion of trading activity occurs on Binance.

Acquisition Highlights

Deribit has established itself as a powerhouse in the crypto derivatives space, facilitating over $1 trillion in trading volume last year and boasting approximately $30 billion in current open interest on its platform. 

“We’re excited to join forces with Coinbase to power a new era in global crypto derivatives,” said Deribit CEO Luuk Strijers in a statement. He highlighted that this acquisition will not only accelerate the growth of both companies but also provide traders with enhanced opportunities across various trading products, including spot, futures, perpetuals, and options, all under the Coinbase brand.

Tusar noted that Deribit’s consistent track record of generating positive adjusted EBITDA is a key factor in the acquisition, suggesting that the combined entity will likely see increased profitability. 

“One of the things we liked most about this deal is that it’s not just a game changer for our international expansion plans — it immediately diversifies our revenue and enhances profitability,” he told CNBC.

This acquisition comes at a time when the cryptocurrency industry is benefiting from a supportive regulatory environment, with President Donald Trump’s administration taking a pro-crypto stance. 

This regulatory tailwind has fueled an increase in mergers and acquisitions within the sector. For instance, in March, US-based crypto exchange Kraken announced its acquisition of NinjaTrader for $1.5 billion, and last month Ripple Labs agreed to buy prime broker Hidden Road.

Featured image from DALL-E, chart from TradingView.com 

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Coinbase Unveils $25M For Political Donations As Stocks Suffer Worst Day In Over Two Years

In a strategic move to increase its influence in the political landscape, US-based cryptocurrency exchange Coinbase has committed an additional $25 million to Fairshake, a political action committee (PAC), as it prepares to support pro-crypto candidates ahead of the 2026 midterm elections.

Coinbase CEO Armstrong Commits $25M To Fairshake

Coinbase CEO Brian Armstrong confirmed the investment during the company’s third-quarter earnings call, stating, “We’re not going to slow down post-election. We know we need to have pro-crypto legislation passed in this country.” 

Fairshake, which has garnered backing from major players in the digital asset sector, including Ripple Labs and Andreessen Horowitz, aims to ensure that both Republican and Democratic candidates recognize the importance of cryptocurrency in their platforms. 

The committee is poised to spend over $40 million in the lead-up to the 2024 elections, having already invested $140 million in various congressional races across the nation.

In the current political climate, Republican nominee Donald Trump has shifted his stance on cryptocurrency, now embracing the industry after previously labeling it as a scam, with promises including firing the Securities and Exchange Commission (SEC) chair Gary Gensler and Bitcoin as a strategic reserve asset for the nation. 

Conversely, Democratic Vice President Kamala Harris has pledged to support a regulatory framework for digital assets if elected. Armstrong noted, “We get the US election results in six days, and no matter how you slice it, it will be the most pro-crypto Congress ever.” 

Coinbase’s CEO emphasized the growing influence of the “crypto voter,” suggesting that their impact will only continue to expand.

Despite these political developments, Coinbase’s stock faced significant pressure following the company’s recent earnings report, which fell short of expectations. 

Analysts Call Current Crypto Market Dip A ‘Temporary Unwind’

Coinbase shares dropped 14.3% on Thursday, marking the steepest decline since May 2022. This downturn was exacerbated by a broader market decline and disappointing earnings from other crypto-related firms, including Robinhood, which saw its stock tumble 15% after reporting weak results.

However, analysts are viewing the current market conditions as a temporary setback. Devin Ryan of JMP Securities described the situation as a “temporary unwind” in crypto stocks, suggesting that long-term investors may find opportunities amidst the volatility. 

The analyst further pointed out that upcoming events—such as the US elections and rising crypto prices—could positively impact Coinbase’s fourth-quarter revenue if trends continue.

Owen Lau, an analyst at Oppenheimer, also noted that the recent stock decline might be tied to concerns about subdued trading volumes and the potential impact of lower US interest rates on Coinbase’s stablecoin revenue. 

Coinbase

At the time of writing, COIN shares were trading at $179 after hitting a three-month high of $223 last Tuesday.

Featured image from DALL-E, chart from TradingView.com 

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Bitwise Heralds Coinbase (COIN) As The ‘Next Amazon’: Price Targets

In a recently published report by Bitwise, the leading crypto index fund manager, a striking comparison has been drawn between Coinbase and Amazon, highlighting a significant yet under-reported aspect of Coinbase’s business — the Base Layer 2 network. Titled “It’s All About That Base (and Other Thoughts on Coinbase),” the report authored by Matt Hougan and Juan Leon delves deep into the financial and strategic shifts underpinning Coinbase’s latest successes and potential future.

Amazon Of Crypto? Bitwise Projects Stellar Future For Coinbase

Coinbase’s latest financial results have been a revelation, demonstrating robust growth and operational efficiency. The company reported $1.6 billion in net revenue, marking a 116% increase year-over-year, significantly surpassing Wall Street’s expectation of $1.36 billion.

Profits were equally impressive, reaching $1.2 billion with total cash reserves swelling to $7.1 billion. Each of Coinbase’s business lines showed notable growth: consumer trading revenue rose by 93%, institutional trading by 105%, stablecoin revenue by 15%, blockchain rewards by 59%, and custodial services by 64%.

Despite these strong numbers, the stock has trended downwards, suggesting that the market may not fully appreciate the depth of the company’s strengths. However, Bitwise highlights a less conspicuous but potentially transformative element of Coinbase’s portfolio: the Base Layer 2 network.

Launched in August atop Ethereum, Base aims to enhance the blockchain’s throughput while lowering costs. It operates similarly to a bar tab, aggregating transactions and settling them in batches, thereby reducing transaction costs to under $0.01 and speeding up processing times to less than one second.

The adoption rate of Base has been staggering. The network saw a 74% increase in transactions quarter-over-quarter in the first quarter, with a 40% increase in April alone compared to the entire first quarter. The exponential growth in the number of developers using Base, which increased eightfold, underscores the network’s rising significance and the broader industry’s interest.

From a financial perspective, Base has been lucrative for Coinbase. In the first quarter alone, the network generated $27.4 million in transaction fees, of which Coinbase retained $15.5 million. This high-margin revenue stream continued into April, adding another $11 million to Coinbase’s profits. Given these trends, Bitwise predicts that Base could soon be contributing $10 million to $20 million in monthly profits to Coinbase.

The analogy with Amazon is rooted in the transformation potential of Base. Just as Amazon evolved from a simple online bookstore into a retail giant and later a dominant force in cloud computing through Amazon Web Services (AWS), Coinbase could similarly evolve from a crypto brokerage to a fundamental infrastructure provider for the crypto industry.

This shift could redefine Coinbase’s role and impact within the market, positioning it as a central infrastructure entity in the crypto ecosystem, akin to how AWS underpins much of today’s web services.

The report concludes by reflecting on the significance of Base for Coinbase’s strategic direction. “[T]he early returns on Base suggest that Coinbase could end up becoming something even greater: a core infrastructure provider to the crypto ecosystem. And that would be a very big deal indeed.”

COIN Price Analysis

Analyzing the technical landscape, the price of Coinbase (COIN) currently faces a pivotal moment. After dropping to $211.20 (as of press time), down 11.4% from a weekly high of $235.79, the stock is testing significant resistance and support levels that could dictate its short-term trajectory.

The Fibonacci retracement tool, applied from a low of $31.62 to a high of $429.52, identifies critical price points. Presently, COIN is contending with the $230.57 level (0.5 Fibonacci level), which acts as the primary resistance. The 20-week Exponential Moving Average (EMA) provides crucial support at $199.35, with the stock recently bouncing off this level.

The Relative Strength Index (RSI) stands at 56.10, suggesting a balanced dynamic between buying and selling pressures, with a slight tilt towards buying. The recent price behavior, characterized by a candlestick with a small body and longer wicks, reflects the ongoing uncertainty and cautious sentiment among traders.

Coinbase COIN price

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Bitcoin ETFs Boosts Coinbase (COIN) Shares As JPMorgan Upgrades Rating

The recent Bitcoin rally, propelling its price to the $52,000 level, has positively impacted the stock of US-based cryptocurrency exchange Coinbase (COIN). After experiencing a notable dip to $115 at the start of February, Coinbase’s stock rose to $172 on Thursday, following a significant upgrade by a JPMorgan analyst.

Improved Prospects For Coinbase Amid Crypto Rally

According to a Bloomberg report, JPMorgan analyst Kenneth Worthington abandoned his bearish view on Coinbase weeks after downgrading the stock. 

As Bitcoin traded higher, Coinbase shares gained as much as 7.8% following the upgrade. Worthington believes the exchange will likely benefit from the recent rally in digital asset prices, prompting him to shift his rating back to neutral.

This change in stance comes after Worthington’s January downgrade, where he predicted a potential deflation of enthusiasm for Bitcoin exchange-traded funds (ETFs). 

However, contrary to his previous forecast, Bitcoin ETFs have been successful in terms of trading measures, and the price of Bitcoin has surged beyond $52,000, reaching its highest level since 2021. In a note to clients on Thursday, Worthington explained:

Given the acceleration in recent days of flows into Bitcoin ETFs and the significant price appreciation of Bitcoin and now Ethereum, we are returning to a Neutral rating on Coinbase as we see the higher cryptocurrency prices not only sustaining but improving activity levels and Coinbase’s earnings power as we look to 1Q24.

Coinbase

Coinbase’s stock experienced an 8% dip at the beginning of the year, following an impressive 400% surge in 2023. Analyst opinions on the stock remain divided, with buy, hold, and sell recommendations being roughly evenly split. 

Worthington maintained his $80 price target on the stock ahead of the company’s earnings report, which is scheduled to be released after the market closes on Thursday.

Worthington emphasized that Coinbase’s business is closely tied to token prices, with its core revenue being transaction-based. As the value of tokens increases and trading activity gains momentum, fees based on the value traded are expected to drive higher trading volumes, ultimately contributing to improved revenue for Coinbase.

Bitcoin ETFs Witness Significant Trading Volume 

On February 14th, the trading volume of Bitcoin ETFs showcased notable figures, with Blackrock’s IBIT recording the lead with $721 million in volume. 

Grayscale’s Bitcoin Trust (GBTC) followed closely with $619 million, while Fidelity’s FBTC secured the third spot with $456 million. On the other hand, Ark Invest accumulated a volume of $169 million.

The nine ETFs’ total trading volume amounted to approximately $1.5 billion. Notably, the largest ETFs experienced higher trading volume than the previous day, with IBIT surpassing $700 million and GBTC exceeding $600 million.

Coinbase

Intriguingly, before the trading session, GBTC sent less than half of the Bitcoin it sent to Coinbase the previous day. Despite this decrease, GBTC’s total trading volume was 50% higher.

As the demand for Bitcoin continues to surge, ETFs play a crucial role in facilitating institutional and retail investors’ participation in the cryptocurrency market. The increased trading volume of Bitcoin ETFs highlights investors’ growing interest and confidence in digital assets.

Coinbase

Currently, Bitcoin is trading at $51,900 and encountering a critical resistance level at $52,000. 

Featured image from Shutterstock, chart from TradingView.com