BofA Upgrades Coinbase After Pullback, Says Crypto Adoption Still in 'Early Innings'

Bank of America upgraded Coinbase Global Inc. (NASDAQ: COIN) from Neutral to Buy, setting a $340 price target. The move reflects optimism about Coinbase's long-term growth potential.

Coinbase shares have dropped about 40% from their July 2025 highs, making the stock significantly cheaper according to Bank of America analysts. The firm noted that the decline has overshadowed Coinbase's product momentum and expansion into new markets.

BofA analysts also pointed to Coinbase's Layer 2 blockchain, Base, as a key part of its infrastructure strategy. Base processes over 2 million daily transactions and hosts more than 500 decentralized applications.

Why Did This Happen?

The upgrade comes as Coinbase continues to diversify its revenue streams. Transaction revenue now accounts for about 55% of total revenue, down from over 80% in previous cycles. This shift has reduced the company's exposure to the volatility of trading fees.

Bank of America cited three main factors for the upgrade. First, Coinbase's role in the exchange-traded fund (ETF) ecosystem has provided a stable fee income stream. The company serves as a custodian for multiple spot Bitcoin ETFs.

Second, the development of Base has created network effects that extend beyond trading. This infrastructure provides additional revenue opportunities and positions Coinbase as more than just an exchange.

Third, Coinbase Tokenize could unlock new markets for real-world asset tokenization. The platform enables traditional assets like real estate and commodities to be represented on blockchain networks.

How Did Markets React?

Following the upgrade, Coinbase shares rose slightly to $247.16. The stock is now trading at a 21.38 P/E ratio, which is relatively low compared to its earnings growth potential.

Analysts at Goldman Sachs also upgraded Coinbase to Buy, though they warned about potential execution risks and competition. The firm noted that institutional adoption could be driven by clearer regulations.

What Are Analysts Watching Next?

Regulatory developments remain a key concern for Coinbase and the broader crypto industry. The U.S. is moving toward federal digital asset market structure legislation, which could provide a clearer regulatory framework for exchanges.

Coinbase's expansion into prediction markets and stock trading has also drawn attention. The company is acquiring The Clearing Company, a prediction market startup, to support these initiatives.

Investors are also watching Coinbase's ability to scale new revenue streams. Subscription and services revenue rose 34.3% in the third quarter of 2025, driven in part by stablecoin adoption.

Despite the bullish upgrade, some analysts remain cautious. Rosenblatt lowered its price target for Coinbase to $325, citing a slowdown in trading volumes.

Coinbase's CEO Brian Armstrong recently sold $9.9 million in shares under a pre-arranged trading plan. He also exercised options to acquire 40,000 shares at $18.71 each.

The market's broader reception to crypto-related news will also play a role. Bitcoin is on track for its first annual loss since 2022, and volatility remains a concern.

Regulatory clarity and macroeconomic factors will likely shape the trajectory of Coinbase's stock in the coming months. Investors are monitoring whether new products and services can sustain revenue growth as trading volumes stabilize.