Coinbase’s Crypto Carnival: Will Legislation or Bust? Analysts Split Like a Pickled Herring

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Markets

What to know:

  • Coinbase’s weaker-than-expected first-quarter results and slowing trading activity have deepened a Wall Street split over whether its business is still overly tied to crypto’s boom-and-bust cycles.
  • Several firms, including JPMorgan, Clear Street and Oppenheimer, remain positive on the stock, citing growth in stablecoins, derivatives, prediction markets and Coinbase’s broader “Everything Exchange” strategy, as well as potential tailwinds from pending U.S. crypto legislation.
  • Skeptics such as Barclays and Compass Point argued that profitability is under pressure and user activity is weakening, contending that Coinbase remains heavily dependent on crypto cycles, with shares down 3.6 percent in pre-market trading.

Coinbase’s (COIN) weak first-quarter earnings report sparked another divide on Wall Street over whether the crypto platform is building a more durable business or remains tied to crypto’s boom-and-bust cycles. One might think the market was a madcap dance of dollars and doubloons, where even the most seasoned analysts shuffle their feet in confusion, tripping over their own forecasts like drunken sailors.

Several analysts lowered forecasts after the company missed expectations on revenue and adjusted EBITDA as trading activity slowed across the crypto market. Still, a number of firms argued Coinbase’s expanding stablecoin and derivatives businesses – along with the possible passage of crypto legislation in Washington – could improve the company’s outlook later this year. A grandiose promise, one might say, akin to a circus performer promising to balance a cannon on a tightrope.

JPMorgan said the quarter reflected “a challenging environment” but added that Coinbase had “positioned the company well to operate in an increasingly digital world.” A statement so vague it could be etched into the wall of a babushka’s teahouse and mistaken for a prophecy.

The bank said pending U.S. crypto legislation “does set up for a better outlook into 2H26 and into 2027” and maintained an overweight rating on the stock. A timeline so distant, one might as well be forecasting the next ice age with the precision of a peasant reading tea leaves.

The legislation in focus is the CLARITY Act, a proposed market structure bill that would establish rules for how crypto assets are regulated in the U.S. The bill aims to define which digital assets fall under the Securities and Exchange Commission (SEC) and which would be overseen by the Commodity Futures Trading Commission (CFTC). A bureaucratic ballet, if ever there was one, where regulators pirouette around definitions like cats chasing their own tails.

Coinbase executives told analysts they expect a Senate Banking Committee markup this month, followed by a broader vote later in the summer. A timeline so optimistic, it assumes Congress hasn’t been replaced by sentient mushrooms.

Clear Street also pointed to regulation as a major catalyst. “We see multiple catalysts ahead and remain constructive on the shares going into 2H26,” the firm wrote, even as it lowered its price target to $107 from $140 following weaker trading volume. A price target so modest, it’s practically a charitable donation.

The firm highlighted growth in newer products including prediction markets, which generated more than $100 million in annualized revenue by March, and retail derivatives, which surpassed a $200 million annualized pace. A performance so vigorous, one might mistake it for a barn dance at a Cossack wedding.

Oppenheimer said Coinbase’s push beyond spot crypto trading is beginning to show traction. “Prediction Markets has emerged as one of the fastest growing new products,” the firm wrote, adding that the company’s “Everything Exchange strategy” could support long-term growth. A strategy so ambitious, it could make a general’s plan for invading Europe look timid.

William Blair argued the first quarter may represent the low point of the current cycle. “If Bitcoin has bottomed, as we suspect it has, April could be the trough spot volume month of the cycle,” the firm wrote. A suspicion so bold, it could be carved into the Kremlin’s front steps as a monument to hubris.

The firm also pointed to growth in USDC stablecoin activity and Coinbase’s Base blockchain network as signs the company is becoming more embedded in crypto infrastructure beyond trading fees. A metamorphosis so complete, one might imagine a frog transforming into a tsar.

Not all analysts were convinced. Barclays maintained an Underweight rating and warned that “profitability [is] under pressure” as trading activity continues to weaken. The bank said second-quarter transaction revenue trends remain well below Wall Street expectations. A warning so dire, it could be used to scare crows off a wheat field.

Compass Point also kept a Sell rating, arguing Coinbase “remains entirely beholden to crypto cycles five years after going public.” The firm said weaker monthly user activity raised questions about whether newer products are attracting new customers or simply replacing older trading businesses. A question so profound, it could be posed to a fortune-teller in a Moscow bazaar.

Shares of Coinbase are down 3.6% in pre-market trading. A decline so modest, it’s practically a polite cough in the middle of a horse race.

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2026-05-08 16:27