Is Coinbase on its way to being the top cryptocurrency exchange in the crypto space?

Regardless of any signs showing where the crypto exchange has done anything significant, experts believe Coinbase (COIN) has a great way ahead.

The largest cryptocurrency exchange in the United States in terms of total trading volume, Coinbase Global Inc., generally known as Coinbase, is assumed to attain greater achievements in upcoming times, as per several industry experts. On Thursday, prominent analyst Stephen Glagola started coverage on Coinbase stock, COIN, with an outperform rating. 

The analyst stated that the security infrastructure and regulatory commitments of Coinbase Global (COIN) allow the firm to gain a structural advantage over the top competitors across the world, considering the bitcoin and other cryptocurrencies’ volatility. Glagola said that the company, Coinbase, dominates while holding a position in spot volume exchange in the United States with a flourishing subscription count and available services on the platform. 

Cowen analyst further said that the Coinbase has a competitive advantage due to a significant and consistently increasing share of assets that presents a considerable opportunity for Coinbase stock, COIN to build on taking advantage of customer relationships, growing subscriptions, and revenue generated through services. 

For now, Glagola initiated his coverage on Coinbase while targeting its stock price of $85. The current price of Coinbase stock, COIN, is about 69.87 after showing growth of about 4.07% in a day. However, the stock price of Coinbase has fallen by about 73% this year from its high. 

The value of cryptocurrency exchanges like Coinbase depends upon their operation, which primarily includes buying, selling, storing, trading, and investing in cryptocurrencies. So they depend crucially upon the trading prices of digital assets where their fluctuations impact stock prices of such crypto exchanges. Coinbase (COIN) is also going through a similar situation, considering the ongoing bearish trend that the crypto market is witnessing. 

The primary source of revenue generation for Coinbase is several percent of fees that it charges over depositing the funds and trading cryptocurrencies on the platform. Currently, about 50 cryptocurrencies are listed on Coinbase available for trading, including top cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). 

Glagola explained that in his view, the current structure of the industry suggests that there is a low risk of fee compression in the near future, considering the platforms like Coinbase have other sectors to compete in like security or trust of the platform, accessibility to assets, their ease of use and customer support. He said that there would be a material fee compression in the long run as the industry grows mature and product offerings would become more commoditized among Coinbase like companies. 

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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