To The Moon

Coinbase's stock recently slumped 11% pre-market after reporting a Q2 2025 adjusted profit drop due to a 44% decline in trading volume from the prior quarter, reflecting lower crypto market volatility and trading activity. Despite this, the GENIUS Act, signed into law in July 2025, is a significant long-term catalyst for Coinbase. Here’s a breakdown of the future outlook for Coinbase in light of this legislation:

Impact of the GENIUS ActThe GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) establishes a federal framework for stablecoins, requiring full reserve backing, real-time redemption, and transparency standards. This is a pivotal moment for Coinbase, given its deep involvement with USD Coin (USDC), the second-largest stablecoin:Regulatory Clarity Boosts Stablecoin Growth:The Act legitimizes stablecoins like USDC, co-founded by Coinbase and Circle, fostering trust and institutional adoption. It positions stablecoins as a cornerstone of the "Web3 economy," potentially transforming them into the "money rail of the internet."

Coinbase earns 100% of interest on USDC held on its platform and 50% of USDC revenue generated elsewhere, creating a significant revenue stream. With USDC’s market cap at $61.4 billion and the stablecoin market at $256–260 billion, analysts predict explosive growth.

Institutional and Mainstream Adoption:The Act’s clarity encourages institutional investors, corporations, and even sovereign entities to adopt stablecoins, with Coinbase as a key infrastructure provider. It serves as custodian for crypto ETFs managing over $120 billion and supports over 200 financial institutions via its "Coinbase as a service" model.

Partnerships like Coinbase’s integration with Shopify for USDC payments highlight its role in enabling global, low-cost transactions, challenging legacy payment networks like Visa and Mastercard.

Derivatives and New Revenue Streams:Coinbase’s $2.9 billion acquisition of Deribit, the leading crypto options platform with a 75% market share, positions it to capture the 75% of crypto trading volume in derivatives. The launch of perpetual futures trading in July 2025, supported by USDC as collateral, further strengthens its offerings.

The Act’s framework supports these innovations by reducing regulatory risks, potentially driving more trading volume to Coinbase’s regulated platforms.

Challenges and RisksDespite the positive outlook, Coinbase faces near-term challenges:Trading Volume Decline: Q2 2025 saw a 44% drop in trading volume to ~$220 billion, impacting transaction revenue, which fell 19% from Q4 2024. This volatility underscores Coinbase’s reliance on trading fees, though diversified revenue from subscriptions, custody, and stablecoins mitigates this.

High Valuation Concerns: Some analysts, like Morningstar’s Michael Miller, argue Coinbase’s stock is overvalued, trading at $382 with a forward P/E ratio of 60.23x. The average analyst price target of $341 is 14% below the current price, with some as low as $205.

Competition: Rivals like Robinhood, which reported doubled crypto trading revenue in Q2, are ramping up in a friendlier regulatory environment, potentially pressuring Coinbase’s market share.

Future OutlookShort-Term (2025): Analysts expect trading volumes to rebound in Q3 due to renewed crypto enthusiasm post-GENIUS Act and potential passage of the CLARITY Act, which could define non-stablecoin crypto regulations. Coinbase’s stock could hit $400 (a 16% increase) if it capitalizes on stablecoin growth and derivatives. However, volatility remains a risk.

Long-Term (2026–2030): Coinbase is transitioning from a speculative crypto exchange to a core infrastructure provider for the digital economy. The GENIUS Act, combined with its ETF custody, Deribit acquisition, and USDC revenue, positions it for sustained growth. Predictions suggest a 2025 price range of $371.20–$455.93, with potential highs of $450.65 by 2029.