Foreign media reports that as the US market gradually opens up access to crypto perpetual contracts, Coinbase's competitive environment in this business is becoming increasingly crowded. Compass Point maintains its bearish price target of $140 for the stock, believing that derivatives business may not become a new profit driver for Coinbase.
Compass Point remains bearish.
Compass Point analysts stated that the switching costs in the perpetual contract market are lower, allowing users to easily migrate between different platforms. For users more familiar with derivatives trading, platforms find it difficult to maintain the same level of revenue generation as they do with spot trading.
The article mentions that Coinbase recently received approval from the U.S. Commodity Futures Trading Commission (CFTC) to offer offshore crypto perpetual contracts to U.S. users through its subsidiary Deribit. Deribit is a derivatives platform that Coinbase acquired last year for $2.9 billion.
Increased competition in the US market
On the same day, the CFTC also approved Kalshi's launch of perpetual contracts linked to Bitcoin. Subsequently, the CME Group announced that its Bitcoin futures and options trading would be available 24/7.
Compass Point also noted that Interactive Brokers, a major global brokerage, has integrated with Kalshi and the crypto trading platform Bullish. Meanwhile, Kraken and Robinhood have announced the launch of perpetual contracts, meaning Coinbase faces increasing competition.
First-quarter revenue concerns not eliminated
Coinbase reported $50 million in revenue from its perpetual contracts business in the first quarter, but Compass Point believes this growth may be accompanied by internal business substitution. Analysts point out that Coinbase's retail trading revenue for the quarter has fallen to its lowest level since the third quarter of 2024.
Compass Point further stated that if the CFTC allows US users access to more platforms in the future, including offshore exchanges like Hyperliquid or Binance, Coinbase's market share and pricing power may continue to face pressure. The firm also predicts that leverage restrictions in the US market will weaken the attractiveness of domestic perpetual contract products.
Additional information:The article also mentions that analysts list the possibility of Binance regaining access to the US market as one of the risks, and cites the USD1 stablecoin launched by World Liberty Financial, a project related to the Trump family, as potentially increasing market attention to this prospect.
