JPMorgan analyst Kenneth Worthington said in a note earlier this week that Coinbase Global (COIN) may be able to generate $1.2 billion of interest income-driven revenue in 2023 given increases in short-term interest rates.
JPMorgan estimates that Coinbase’s partnership with Circle could contribute around $700 million of additional revenue. The CENTRE Consortium, formed in 2018 with USDC issuer Circle, obtained a share of interest income from USDC reserves.
According to JPMorgan, Coinbase can earn an interest income of up to $1.2 billion next year by appealing to customers’ appetite for digital currencies and garnering interest on its corporate cash balance.
JPMorgan and USDC
JPMorgan said that a significant risk for Coinbase to obtain interest income is the possibility of holding fewer USDC and fiat money with the exchange. JPM claimed that institutional investors could constrain USDC holdings due to the expense of holding quasi-cash that doesn’t provide a return.
It is possible that retail dollars would be less on Coinbase if they didn’t provide a yield. We believe that USDC balances and fiat balances on Coinbase could diminish as a result, JPMorgan said. You will also be interested in — how to trade bitcoin with Bybit mt4?
Stock Rating Coinbase
JPMorgan kept its stock-rating untouched at neutral for cryptocurrency exchange Coinbase, though it raised its price target to $78 from $64. Coinbase’s shares are down about 70% this year, trading at about $76 per share Friday morning.
