Key Points:

• Coinbase’s acquisition of Deribit for $2.9 billion elevates it to the leading position in the global crypto options market, overtaking Binance and others.
• Analysts predict this move signals the beginning of a consolidation trend, with Coinbase leveraging its public market advantage.
• The deal enhances Coinbase’s global outreach and strengthens earnings, with Deribit’s revenue forecasted to be between $425 million to $450 million in 2024.

Coinbase’s acquisition marks a pivotal moment, positioning it against major players like Binance as noted by Wall Street analysts.

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The expansive deal isn’t merely an upgrade but signifies a major shift in the trading industry landscape. Analysts claim this acquisition could initiate a sense of pressure on smaller exchanges while traditional finance firms aim to increase their presence within the crypto market.

Deribit holds 85% of the global crypto options market, having reported a trading volume of $1.2 trillion last year. By acquiring it, Coinbase becomes the world’s foremost crypto derivatives platform regarding open interest and transaction activity, as highlighted in a report by KeyBanc.

This deal not only fulfills a strategic expansion need for Coinbase but also addresses geographical gaps, as only 20% of its revenue currently comes from international markets, according to Barclays.

Industry analysts emphasize that Coinbase’s publicly traded status allows it to utilize stock as a funding method for acquisitions, a flexibility that private companies typically lack. With $8.5 billion in cash reserves, Coinbase is poised to become a leading consolidator in the sector.

Options markets are particularly enticing due to their consistent volume across various market conditions, with Deribit anticipated to contribute significantly to Coinbase’s finances.

KeyBanc underlined the complementary nature of Deribit’s institutional clientele and overseas reach to Coinbase’s existing product offerings.

Regulatory approval for this acquisition is still pending, but analysts are expectant for further elaboration during Coinbase’s upcoming earnings report.

Despite the expectations for disappointing earnings in the first quarter due to market volatility, Coinbase shares experienced a 6.58% rise, coinciding with a 4.31% increase in bitcoin prices.

Read more: Coinbase Earnings Forecast Suggests Challenges Amid Slump in Retail Activity