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Coinbase (COIN) has emerged as the top performer in the S&P 500 for June, buoyed by a series of favorable regulatory updates, new product launches, and its recent inclusion in the stock index at the end of May.
COIN Stock Soars 43% In June
As reported by CNBC, Coinbase’s COIN stock is on track for its best month since November, achieving a 43% increase in June alone. This marks the company’s third consecutive monthly gain and its first three-month rally since the end of 2023.
On Thursday, the company’s stock reached the $381 level, its highest price since its initial public offering (IPO) over four years ago, signifying a major milestone for the exchange.
Oppenheimer analyst Owen Lau noted that the positive trajectory for Coinbase has been fueled by several factors, including its S&P 500 inclusion, the Senate’s passage of the GENIUS Act and the strong performance of Circle (CRCL), the issuer of the USDC stablecoin.
Lau emphasized that these developments have dispelled negative narratives surrounding the exchange, indicating that investors are beginning to recognize Coinbase’s potential.
Strategic Ties With Circle
Despite Coinbase’s impressive 44% surge this month, analysts believe there is still significant growth potential. Devin Ryan, head of financial technology research at Citizens, pointed out that the market has yet to fully appreciate Coinbase’s strategic relationship with Circle Internet Group.
Since Circle’s debut on the New York Stock Exchange (NYSE) on June 5, its stock skyrocketed 500% toward its highest paid price so far of $297. However, CRCL closed the week at $180.
According to a revenue-sharing agreement, Coinbase retains 100% of the revenue generated from all USDC held on its platform and nearly 50% of all other USDC revenues, which constitute 99% of Circle’s current income.
Ryan highlighted that Coinbase incurs none of the operational costs associated with Circle, positioning it as an attractive investment option if the bullish sentiment for Circle continues.
Coinbase Expands Offerings
This month, Coinbase enhanced its subscription plan by introducing its first crypto-backed credit card in partnership with American Express, alongside a collaboration with Shopify to launch a stablecoin payments service for e-commerce.
Additionally, JPMorgan has partnered with Coinbase to create its own stablecoin, referred to as a “deposit token,” utilizing Coinbase’s proprietary blockchain, Base.
However, there are concerns regarding trading volume. Lau pointed out that the average daily volume of crypto transactions on Coinbase has been declining since April, which poses a risk for the company and its peers as the year progresses.
Nonetheless, the Oppenheimer analyst remains optimistic about the regulatory landscape in the US, particularly if market structure legislation emerges alongside stablecoin regulations on track to the President’s desk for full approval.
“If the GENIUS Act heralded a ‘stablecoin summer,’ then the eventual passage of the CLARITY Act could usher in an ‘altcoin summer,’” Lau remarked. He anticipates that positive momentum could return to the market, igniting interest in altcoins among investors.
Featured image from DALL-E, chart from TradingView.com
