Coinbase's Institutional Shift and ETF Custody Drive Buy Upgrade

Analysts at Rothschild & Co Redburn upgraded Coinbase Global (NASDAQ: COIN) to "Buy" from "Neutral" in a recent note, raising their price target to $417 from $325. The decision reflects growing institutional adoption of cryptocurrencies and Coinbase's strategic pivot away from retail trading fees toward diversified revenue streams. According to Redburn, transaction fees now account for only 50% of Coinbase's revenue, down from 90% in its early years post-IPO. This shift is attributed to the company's expansion into institutional services, derivatives, and stablecoin partnerships, including its $2.9 billion acquisition of crypto options exchange Deribit and a revenue-sharing agreement with Circle Internet Group for USD Coin (USDC) distribution.

Institutional demand has been further catalyzed by regulatory developments, notably the 2024 approval of spot Bitcoin and Ether ETFs in the U.S., which accelerated mainstream participation. Coinbase now serves as custodian for 9 out of 11 spot Bitcoin ETFs and 8 out of 9 ETH ETFs, underscoring its role as a trusted infrastructure provider. The firm's Prime Custody service, offering segregated accounts and audited transparency, has solidified its position as a custodial leader. Additionally, the launch of the Coinbase 50 (COIN 50) index-a benchmark for the top 50 digital assets by market capitalization-provides institutions with a standardized tool for performance tracking and product development.

Strategic partnerships have amplified Coinbase's institutional appeal. In July 2025, the firm announced a long-term collaboration with JPMorgan Chase, enabling JPMorgan's 80 million customers to fund Coinbase accounts via Chase credit cards, redeem Chase reward points for USDC, and integrate bank-to-wallet transfers. Bernstein analysts described the partnership as a "major unlock for crypto adoption," signaling a shift in legacy institutions' approach to digital assets. Jamie Dimon's past skepticism toward crypto contrasts with JPMorgan's current integration strategy, which aims to bridge traditional finance and the cryptoeconomy through interoperable services.

Market performance has mirrored these institutional tailwinds. Coinbase's stock surged 128% year-to-date as of October 2025, with a five-day winning streak lifting shares 21% in late September. Despite a 0.2% premarket decline following the Rothschild upgrade, the stock's resilience highlights investor confidence in its dual retail-institutional model. Redburn noted that Coinbase's retail take rate has averaged 1.5% despite competitive pressures, while its derivatives business-bolstered by Deribit's acquisition-accounts for a growing share of total revenue.

Regulatory advocacy and technical upgrades further position Coinbase as a market leader. The firm has lobbied for modernized oversight frameworks, arguing that blockchain's transparency can enhance compliance compared to traditional cash-based systems. Technologically, Coinbase recently migrated its Market Data Services to a low-latency architecture, improving performance for high-frequency trading and real-time data processing. These enhancements, coupled with its role in custody, financing, and staking programs for institutions, reinforce its ecosystem-wide value proposition.

While Wall Street remains divided-with 17 of 38 analysts recommending "Buy" or equivalent and 17 "Hold"-Rothschild's upgrade underscores a broader trend: institutional crypto adoption is accelerating. As Coinbase continues to diversify revenue, expand custody solutions, and forge partnerships with traditional financial giants, its stock is increasingly seen as a proxy for the sector's maturation. With global crypto derivatives volume hitting $40 billion in open interest by late 2024 and institutional clients managing high-value assets via Coinbase's platform, the firm's trajectory aligns with a financial system increasingly embracing digital assets.

Source: [1] Coinbase Institutional: Leading the Way in 2025 (https://www.coinbase.com/blog/coinbase-institutional-leading-the-way-in-2025) [2] Coinbase upgraded as institutional crypto adoption accelerates, says Rothschild (https://cryptorank.io/news/feed/23e1b-coinbase-upgraded-as-institutional-crypto-adoption-accelerates-says-rothschild) [3] Coinbase (COIN), JPMorgan (JPM) Partner in Institutional Crypto Push (https://www.coindesk.com/markets/2025/07/30/coinbase-jpmorgan-deal-signals-shift-in-institutional-posture-towards-crypto-bernstein)