JPMorgan analyst Kenneth Worthington believes Coinbase will be a “significant beneficiaryof the highly anticipated Ethereum (ETH) blockchain upgrade, scheduled for September 19.
The analyst claims that the cryptocurrency exchange has recently taken some real initiatives “to maximize the value of Eth staking for its customerswhich Worthington says should translate to better revenue generation for Coinbase itself, according to an Aug. 17 StreetInsider report.
“We see the staking revenue opportunity larger (proportionately) than the revenue opportunity given that we expect institutional staking clients to contribute significantly to Eth staking revenue, but much less so for institutional clients. The vast majority of the economy stays with individuals,” Worthington said in a client note.
Notably, as the merge approached, the total amount of its native ETH token staked hit a new all-time high, nearly doubling over the previous year despite its price dropping 43% over the same period. .
Coinbase has a 15% market share for ETH.
The Ethereum merger is widely regarded as one of the most important milestones in the long and turbulent history of cryptocurrencies. By some estimates, Coinbase has a 15% market share for ETH assets.
“We estimate Coinbase’s incremental annual staking revenue from the Ethereum merger to be $650 million based on 2,000Eth and an Eth yield of 5%. We see an additional $80 million to $100 million annually in staking revenue,” Worthington added.
“Coinbase is bigger in [éther] than what was intuitive for us, which leads directly to a greater revenue opportunity “, wrote the bank. JPMorgan also gave Coinbase shares a neutral rating and a price target of $64.
Although retail customers may “circulate more in more speculative tokens“, according to Worthington, Coinbase’s market share is clearly skewed towards institutions that are more likely to buy ETH and Bitcoin (BTC).
Finally, according to the analyst, besides Coinbase, FTX, Gemini and Binance should all benefit from the merge.