Divergent Analyst Views and Regulatory Pressure Shape Coinbase’s Path

Coinbase US19260Q1076

The investment case for Coinbase Global, Inc. is being pulled in opposing directions by conflicting analyst assessments and a brewing regulatory challenge, even as a key segment of its business demonstrates remarkable strength.

The first week of January presented a stark contrast in Wall Street sentiment. On January 5, Goldman Sachs raised its rating on the cryptocurrency exchange's stock to "Buy," establishing a price target of $303. The firm's analysts highlighted a strategic shift within Coinbase, noting its growing reliance on stable infrastructure revenue streams that are less dependent on volatile trading volumes.

This optimistic view was immediately countered. The very next day, Rosenblatt Securities significantly reduced its price target from $470 to $325. The rationale centered on a sharp decline in trading volumes following a robust third quarter in 2025. Despite this substantial cut, Rosenblatt maintained its "Buy" recommendation. The divergence underscores a fundamental debate: a long-term bet on custody and infrastructure fees versus concerns over near-term weakness in the core trading business.

Record Inflows for Bitcoin ETFs Provide a Counterweight

Amidst this analytical disagreement, a powerful positive trend is unfolding. U.S. spot Bitcoin ETFs witnessed monumental inflows, with a single-day record of $697 million on January 6—the highest since October 2025. Total inflows for the first two trading days of the year reached $1.2 billion.

This activity directly benefits Coinbase’s business model:
* The company serves as the custodian for the underlying assets for a majority of these ETFs, including BlackRock’s iShares Bitcoin Trust (IBIT).
* IBIT alone attracted over $372 million on January 6.
* Rising assets under custody translate to predictable fee income, insulating the company from market volatility and supporting Goldman Sachs’ infrastructure thesis.

Banking Lobby Mounts a Regulatory Offensive

A significant threat emerged on January 6. The Community Bankers Council, representing more than 200 financial institutions, urged the U.S. Senate to address a perceived "loophole" in the proposed GENIUS Act.

The controversy stems from the bill's prohibition on interest payments by stablecoin issuers. Crypto platforms like Coinbase currently offer rewards for holding stablecoins—functionally equivalent to interest under a different name. The banking lobby argues this allows crypto firms to operate as unregulated banks, potentially drawing billions in deposits away from the traditional financial system. Should Congress act on this pressure, Coinbase could lose a vital tool for customer retention and asset accumulation.

Operational Setback in Argentina

In a separate operational development, Coinbase will discontinue trading of USDC stablecoins against the Argentine peso effective January 31. While crypto-to-crypto trading will remain available, this withdrawal from a high-inflation economy points to challenges in the company's global expansion strategy.

Upcoming Q4 Earnings Under the Microscope

All eyes now turn to the forthcoming release of Coinbase’s fourth-quarter financial results. Consensus estimates point to a anticipated decline, with projected earnings per share of $1.08 (a 68% year-over-year decrease) and revenue of $1.94 billion (down 14.6%). With a forward price-to-earnings ratio hovering around 43, the stock’s valuation remains demanding.

Currently trading around the $250 level, Coinbase shares await a decisive catalyst. The path forward will be determined by whether the momentum in ETF custody fees can outweigh the combined pressures of falling trading volumes and increasing regulatory scrutiny.