In summary
- Coinbase saw an increase in trading volumes, driven by Bitcoin volatility and the rise of altcoins.
- Analyst John Todaro projected $435 billion in total volume for Coinbase in the fourth quarter.
- Coinbase shares are up 60% since the election, reflecting expectations of favorable crypto policies under Trump.
Along with Bitcoin’s brief jump above $100,000 last week, increased volatility in the asset’s price and an Altcoin boom are driving retail traders back to Coinbase, according to one analyst.
In a note on Monday, John Todaro of investment bank and asset management firm Needham & Co. issued a new price target for Coinbase, raising the key mark to $420 from $375 while maintaining a “buy” rating. In the note, the equity analyst noted that Coinbase’s December trading volumes “are on track to reach their best month ever.”
In October, Coinbase revealed $183 billion in total trading volume for the third quarter, a drop of 18% quarter-over-quarter. The San Francisco-based firm attributed the statistic to a lukewarm Bitcoin market, trading below its March high of $73,800, and unfavorable economic conditions this summer.
In his note, Todaro noted higher expectations for Coinbase’s total trading volume in the fourth quarter, raising his estimate to $435 billion from $243 billion. If proven true, that would equate to a 137% increase in total trading volume in the span of just three months.
The relationship between Bitcoin’s market capitalization and the total value of the crypto market is indicative of the return of retail traders to the industry, according to Todaro.
Also known as Bitcoin dominance, the figure has fallen from 59% last month to 51%, according to data from CoinGecko.
That statistic could drop to 45%, according to Todaro’s note. However, he warned that Bitcoin’s declining dominance is a “telltale sign” of euphoria that often precedes a market crash.
The effect of memecoins
Spot Bitcoin ETFs, approved earlier this year, make gaining exposure to Bitcoin as easy as a few clicks into your brokerage account. While products also exist for Ethereum, Todaro wrote that altcoins make Coinbase unique from an asset listing perspective.
“Given the variety of platforms offering Bitcoin for trading, we believe altcoin activity is the key to COIN’s success and volume growth in 2025,” wrote Todaro.
Among the assets added to Coinbase’s listing roadmap, memecoins have recently been in vogue. The firm has signaled its plans to list Gigachad (GIGA), Turbo (TURBO), Mog Coin (MOG), and Moo Deng (MOODENG)—among its list of 267 digital assets—this month alone.
According to Todaro’s note, Coinbase’s best month of trading volumes occurred in May 2021. Covering that month in its Q2 2021 financials, Coinbase revealed $1.9 billion in trading revenue on $462 billion in total trading volume, according to a filing with the United States Securities and Exchange Commission (SEC).
Although Coinbase has sought to diversify its income since its listing on the Nasdaq, its main money maker remains the fees charged on user transactions. For example, Coinbase’s total transaction revenue for the third quarter was $572 million, while Coinbase’s revenue from subscriptions and services was $556 million, according to an SEC filing.
“Trading is often highly correlated with volatility,” Coinbase CFO Alesia Haas said during Coinbase’s latest earnings call. “Crypto asset volatility decreased in the third quarter compared to the second quarter, so we saw a little change in that volume.”
So how volatile has the price of Bitcoin been lately?
The Bitcoin Volatility Index, which measures BTC’s volatility over the past 30 days in US dollars, rose as high as 2.44% in November, notably below this year’s peak of 3.25% in August.
So far this year, Coinbase’s stock price has nearly doubled, with its stock trading at $310.52 as of Monday’s close. Since Donald Trump’s victory in the White House, Coinbase shares have risen 60% from $194, rising amid hopes and promises of a crypto-friendly administration under the President-elect.
Late last month, Oppenheimer analyst Owen Lau raised his price target for Coinbase shares to $358 from $265, pointing to the growing trading volumes and regulatory clarity expected under Trump. In the note, he forecast that the firm’s total trading volume would reach $350 billion in the fourth quarter.
“Sentiment and momentum for cryptocurrencies has skyrocketed after Trump won the election and Republicans secured majorities in both the House and Senate,” Lau wrote. “We expect the high trading volume to continue under Trump’s crypto policy.”
Edited by Sebastian Sinclair
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