Deutsche Bank Backs Coinbase's On-Chain Push, Targets 40% Gains

Deutsche Bank has initiated coverage of Coinbase Global Inc. with a Buy rating and a $340 price target, suggesting potential upside of nearly 40% from its current level. The bank cited Coinbase's strategic shift toward becoming a broader on-chain platform as a key factor in its recommendation. This evolution is expected to diversify the company's revenue streams and reduce its reliance on volatile retail trading fees according to Deutsche Bank.

Coinbase's "everything exchange" strategy aims to expand its offerings beyond crypto trading into areas like prediction markets, tokenized assets, and institutional services. Deutsche Bank highlighted that this strategy is already beginning to expand Coinbase's addressable market and could help insulate it from market downturns. The firm also noted that 2025 represents a heavy investment year for Coinbase but believes the most intensive phase of spending is now behind it.

The price target reflects a significant premium to Coinbase's current valuation. Deutsche Bank pointed to the firm's strong liquidity position and its ability to scale new products in 2026 and beyond as critical factors in its bullish outlook. The bank also emphasized that Coinbase is trading at a relatively low P/E ratio of 21.97, despite analysts forecasting continued profitability in the near term.

Strategic Evolution and Market Position

Deutsche Bank believes Coinbase's pivot to a broader on-chain platform is a strategic advantage in an evolving financial landscape. The bank highlighted the growing convergence between traditional finance and decentralized finance as a long-term tailwind for the company. By expanding into services like on-chain retail banking, prediction markets, and institutional crypto offerings, Coinbase is positioning itself to serve a wider range of clients.

The firm also noted that Coinbase's product diversification could reduce earnings volatility. The bank pointed to recent earnings contributions from newer products as underappreciated by the market, especially as the company moves toward launching prediction markets and tokenized equities. These developments, if successful, could provide more stable and recurring revenue streams.

Financials and Investment Outlook

2025 has been characterized as an aggressive investment year for Coinbase, with core expenses expected to grow more than 20%. This has weighed on adjusted EBITDA, which the bank forecasts to contract by more than 10% during the year. However, Deutsche Bank believes that the most intensive phase of spending is now behind the company and that Coinbase will see a more favorable financial balance in 2026 and beyond according to the bank's analysis.

The bank noted that revenue growth is expected to outpace expense growth in a supportive crypto market environment, which could allow for modest EBITDA margin expansion. This would mark a turnaround from the current contraction in profitability and help Coinbase regain momentum in its earnings growth according to Deutsche Bank's assessment.

Key Growth Areas and Product Launches

Deutsche Bank identified several key areas that will be crucial for Coinbase's growth strategy. These include the Base App, institutional crypto services, on-chain retail banking features, and expanded trading tools. The bank also highlighted the potential of prediction markets as an emerging revenue driver, particularly after Coinbase announced a partnership with Kalshi to develop in-house prediction markets.

The firm expects product launches in these areas to begin contributing meaningfully from 2026. This includes the rollout of CFTC-regulated perpetual-style futures and the ongoing integration of Deribit, which Deutsche Bank sees as structural growth opportunities, especially for institutional clients according to its research.

Risks to the Outlook

Despite the firm's optimism, Deutsche Bank acknowledged that Coinbase remains exposed to the broader crypto market's volatility. This includes fluctuations in Bitcoin prices, trading volumes, and investor sentiment, which can significantly impact the company's financial performance. The bank also noted that recent share-price weakness has brought Coinbase closer to seven-month lows, with the stock trading near $245.

Regulatory developments, particularly in the European Union, could also pose challenges. Coinbase plans to delist unauthorized stablecoins by December 2024 to comply with the EU's Markets in Crypto Assets (MiCA) rules. This could temporarily impact its stablecoin balances and user engagement in the region, though Deutsche Bank views the move as necessary for long-term regulatory alignment according to official statements.

What This Means for Investors

For investors, Deutsche Bank's Buy rating and $340 target suggest a strong conviction in Coinbase's long-term potential. The firm emphasized that the current share price underappreciates the platform's growth trajectory, particularly as new products begin to scale. With a beta of 3.69 and recent price declines, Coinbase remains a high-volatility bet, but one that Deutsche Bank believes is well-positioned for recovery according to the bank's analysis.

The bank also highlighted that Coinbase's current ratio of 2.4 and strong liquidity position give it flexibility as it invests in new initiatives. This, combined with the growing adoption of on-chain platforms for payments and investing, could support the company's broader vision of becoming an "everything exchange".