JPMorgan Upgrades Coinbase: Strategic Shifts Unlock $34B Value Potential

Shares of Coinbase Global Inc. (COIN) surged over 9% on Friday, reaching $353, as JPMorgan upgraded the cryptocurrency exchange to "Overweight" from "Neutral" and raised its price target to $404 per share, implying a 15% upside from current levels, according to Yahoo Finance. The move follows the bank's analysis of Coinbase's strategic initiatives, including its Base layer-2 blockchain and revamped USDC rewards program, which analysts estimate could unlock billions in value for the company.

JPMorgan's report highlighted Coinbase's exploration of a Base token, a potential catalyst for monetizing its Ethereum-based layer-2 network launched in August 2023. The bank projected a $12 billion to $34 billion market opportunity for the token, with Coinbase retaining up to $12 billion in value if it captures 40% of the supply. The token's distribution, likely prioritizing developers, validators, and the Base community, could accelerate ecosystem growth and infrastructure development.

The upgrade also cited Coinbase's strategy to enhance USDC (USDC) profitability by shifting rewards to Coinbase One subscribers. By reducing interest payouts for general users and focusing on premium customers, the exchange could add approximately $374 million in annual earnings at current interest rates, according to Coinotag. This approach aligns with broader efforts to diversify revenue beyond trading fees, leveraging stablecoin operations that have shown resilience amid market volatility.

Coinbase's stock has risen 42% year-to-date, pushing its market capitalization to $90.6 billion, the FinancialContent report noted. The rally follows a period of turbulence in the crypto sector, including a recent 6.7% drop in COIN shares after a broad decline in Bitcoin prices. However, JPMorgan analysts noted that Coinbase's integrated model—spanning brokerage, market making, and custody—positions it to sustain profitability even if trading fees decline.

The upgrade coincides with growing regulatory clarity in the U.S., including the passage of the GENIUS Act, which provides a framework for stablecoin adoption. Additionally, JPMorgan's price target assumes a 50x multiple on Coinbase's projected 2027 earnings, incorporating $4 billion in value from the Base token and stabilized market share against decentralized exchanges (DEXs).