The Investment Case for Coinbase
Summary:
Coinbase commands a large, fast-growing, and highly engaged user base
Revenue is shifting from cyclical trading fees to more durable recurring sources
The valuation is attractive relative to peers with an opportunistic entry point
[four minute read]
Introduction
Coinbase (NASDAQ: COIN) offers investors exposure to both digital asset adoption and the deepening integration of blockchain technology with traditional finance. This essay explores the investment case.
User Base & Engagement
At just 14 years old, Coinbase has onboarded more than 100 million verified users and 9.2 million monthly active users driving $5.2 trillion in annual trading volume:
While Schwab reports 39 million active accounts (~4x), several factors add context:
Multi-decade head start: Schwab was founded in 1971
Growth: Coinbase user growth has averaged 20-25% vs. 5% for Schwab
Engagement: Active users are highly engaged crypto-native participants, in contrast to historically low frequency activity at legacy brokers
Growth Vectors
Coinbase is building beyond its cyclical exchange business into a suite of recurring revenue streams that more closely resemble a diversified financial institution. The company now has 12 distinct products generating over $100 million in annual revenue:
Stablecoins: As the primary distribution mechanism for Circle’s USDC (second largest stablecoin globally), Coinbase shares in 50% of the interest yield on reserves. This contract, renegotiated annually, drove $1.3B in revenue to Coinbase in 2025.
Banking: Coinbase is now competing with banks for deposits by offering subscribers yields exceeding bank savings accounts. Coinbase recently launched an Amex branded credit card with rewards paid in Bitcoin. Access requires a paid subscription, generating recurring revenue across nearly one million subscribers (and growing):
Wealth Management: Coinbase offers a growing suite of wealth management services for high net worth clients.
Base: Unlike traditional brokers who pay “rent” to exchanges like the NYSE or NASDAQ, Coinbase owns its own infrastructure. Base, Coinbase’s Ethereum Layer 2 network, has become the leading Ethereum transaction layer by volume and grown more than 30x year over year. This vertical integration of the exchange stack is more than a source of growth, it acts as a future strategic moat.
Custody: Coinbase serves as qualified custodian for 90% of all U.S. spot crypto ETFs. Assets under custody increased more than 3x in last three years and are approaching half a trillion dollars, with Coinbase now holding > 10% of all Bitcoin and Ethereum:
Prime Brokerage: Coinbase has positioned itself as the leading broker for a growing cohort of institutional participants. The 2025 acquisition of Deribit, the largest crypto options exchange globally, expands this offering.
Tokenized Equities (digital representations of stocks that can be transacted on public blockchains) will dramatically expand the future product offering:
Financial Highlights:
Net revenue: $6.9B (+9% YoY), split between trading fees (61%) and less cyclical subscription & service revenues (39%).
Adjusted EBITDA: $2.8B (~40% margin)
Cash & equivalents: $11.3B:
Valuation
Coinbase trades at 14x Enterprise Value to adj. EBITDA. While higher than Schwab’s 9x, Coinbase is growing users at 4x the rate and rapidly adding revenue streams. EV/EBITDA compares favorably to rival Robinhood, which trades at 32x.
Technicals
Coinbase completed its IPO in 2021, top ticking the crypto bull market. The stock declined by 90% during the 2022 bear market. By the summer of 2025, Coinbase rallied over 1,100% before once again meeting resistance near the former IPO price:
After getting rejected near the 2021 IPO high, Coinbase lost nearly two thirds of its value while closing a price gap that opened in 2025 (green circle below). The selloff offers investors an attractive entry point at around $160/share:
Conclusion
Coinbase is no longer simply a venue for trading crypto, it’s a diversified financial institution built for an on-chain economy. As the revenue mix shifts from cyclical trading fees to durable recurring sources, the business has become more resilient.
Near-term volatility may persist, but with Coinbase already down nearly 70% from its highs, much of that risk is priced in.
I’m accumulating into weakness ahead of the next cycle.