Key Insights
- Since June 5, the price of Ether has surged by 80%, significantly influenced by Circle’s listing and the increased minting of stablecoins on the Ethereum platform.
- Coinbase generates revenue tied to Ether through its Layer 2 solution named Base and through staking, thus benefiting from the growth of Ethereum.
- Bernstein asserts that Ethereum’s impressive performance indicates an altcoin rally, positioning Coinbase favorably for gains from rising Ether and related tokens.
Overview of Coinbase and Ethereum
As Ethereum’s ecosystem continues to expand, Coinbase (COIN) has emerged as a leading public company aligned with this blockchain technology, as stated in a recent research report by Bernstein.
The report notes that ECC provided a vital boost to ETH’s pricing, driven primarily by Circle’s (CRCL) listing and the realization that the majority of stablecoins are minted on Ethereum’s network.
Coinbase is becoming a major player in Ethereum. (Justin Sullivan/Getty Images)
The Performance of Base
Coinbase operates its own Layer 2 network called Base, which executes over 9 million transactions each day. This includes a wide array of activities such as trading and financial applications, thereby amplifying the company’s earnings in ether.
Although Base does not possess a native token, the transaction fees are settled in ether, generating significant revenue for Coinbase.
Bernstein indicates that Base has become the main choice for deploying tokens, with Coinbase integrating these tokens into its primary trading platform, enhancing overall trading activity and revenue from Ethereum-denominated fees.
With a treasury of Ether valued at $590 million (136,782 ETH), Coinbase is positioned to benefit from any appreciation in the token’s price.
The report from Bernstein assigns an outperform rating to Coinbase stock, assigning a target price of $510, while shares were up by 4%, trading around $323 at the time of publication.
