BLK - Coinbase: How Big Is The Bitcoin ETF Opportunity?

2024-03-20 07:56:36 ET

Summary

• Coinbase holds a dominant position in the Bitcoin ETF custody market, managing about 90% of the assets in this sector.
• The approval of Bitcoin ETFs by the SEC presents a significant opportunity for Coinbase to generate revenue and expand its market share.
• Despite legal challenges, Coinbase's strong position in the ETF market and its proactive steps to address regulatory concerns make it an attractive investment.

Investment Thesis

I believe Coinbase's ( COIN ) key spot within the quickly growing Bitcoin ETF market emerges as a strong part of the bullish narrative, with the opportunity to custody Bitcoin ETFs and help facilitate trades within these funds as still being underappreciated over 2 months after their launch. Their pivotal role is backed by their staggering 90% market share in Bitcoin ETF asset custody.

As financial advisors increasingly eye cryptocurrency allocations, with some projections indicating a willingness to allocate 1-5% of client portfolios to Bitcoin, I believe this sets up a large upside case for Coinbase, especially if they maintain or even slightly reduce their current market share through their Coinbase Prime offering....

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