Coinbase Stock Is Up 48% in 2025. Is It a Buy?

Key Takeaways

• Coinbase stock has soared in 2025, fueled by a booming cryptocurrency market.
• While Coinbase has attempted to diversify its revenue stream with a stablecoin push, the stock remains closely tied to swings in crypto prices.
• While increased adoption of crypto is a plus for Coinbase, it could also bring in greater competition.

Coinbase Global COIN stock has surged to fresh highs this year, riding the tailwinds of a red-hot cryptocurrency market. But after a big rally, and with the company’s fortunes closely tied to the wild ups and downs of crypto prices, the question for investors is whether the stock is still a buy.

Coinbase has climbed 43.77% this year through Oct. 13 to $356.99, positioning the stock for its best annual gain since 2023, when it rose 391.44%. However, it’s been an extremely volatile ride, keeping with its broader history. Over this year, Coinbase shares closed as low as $151.47 and as high as $419.78. While the company is making efforts to diversify its revenue streams, “it really comes down to cryptocurrency prices,” says Morningstar equity analyst Michael Miller.

Why Has Coinbase Stock Soared?

Coinbase stock began 2025 trading at $248.30 per share, and it has since climbed over 50%. But it has hardly been a smooth rise. It’s primarily driven by movements in the cryptocurrency markets, especially the value of bitcoin.

“Coinbase’s business performance is heavily influenced by cryptocurrency valuations and volatility,” says Miller. “Coinbase has direct exposure to cryptocurrency prices through its custody business, which charges fees based on the dollar value of crypto assets held, and its trading business which charges its fees based on the size of the underlying trade.”

To that end, “Indirectly, Coinbase also benefits from higher prices,” Miller says. “When cryptocurrency prices increase sharply, it tends to increase market excitement and pull users into the cryptocurrency ecosystem, driving higher trading volume and usership for Coinbase.”

Coinbase shares started the year on a weaker note, as crypto prices weakened in the wake of a late-2024 rally sparked by the prospect of a crypto-friendly presidential administration. The declines accelerated as investors pulled back from riskier investments like crypto and stocks in response to President Donald Trump’s trade war. That selloff saw Coinbase fall as low as $151.47 per share, a roughly 39% drop from the start of the year. That drop was essentially twice that seen in bitcoin.

When Trump reversed course on the worst of his tariffs, investors piled back into crypto. By late July, bitcoin rallied roughly 57%, while Coinbase was up three times as much, hitting a mid-month record close at $419.78.

However, a sharp break at the end of July halted the rally, as the stock lost roughly 20% in the span of a week. The cause: disappointing earnings results. “The market went into the quarter expecting sequential decline due to lower cryptocurrency prices and volatility, but it ended up being worse than expected,” says Miller. While net revenue rose 2.9% from a year earlier, they were down 27.6% from the prior quarter, driven by a 39.6% drop in transaction revenue. “The core issue was that Coinbase saw a sharp dropoff in activity from retail traders—which are its single largest source of revenue—when cryptocurrency prices were trending lower in the second quarter," Miller explains.

Coinbase quickly recovered from this setback. Since September, the stock has climbed about 27%, helped in part by a still-constructive backdrop for prices and trading volume in the crypto market.

Stablecoin and Coinbase Revenue Outlook

Miller points to Coinbase’s entry into the stablecoin market as another key area of support. The market capitalization of USDC—the stablecoin offered through Coinbase’s partnership with Circle CRCL—has risen to $75 billion. Miller says USDC is a key initiative in the company’s effort to diversify from its current revenue model, which relies heavily on cryptocurrency sentiment and transaction volume. Stablecoins are cryptocurrencies designed to provide stable value by being pegged to a government currency, such as the US dollar.

Coinbase receives a split of USDC revenue through interest income on assets held at Circle. Miller explains that USDC revenue is important to Coinbase because it is interest income not tied to cryptocurrency prices, “providing the firm with some needed diversification and stability.” In the second quarter, stablecoin revenue was 22% of the company’s total revenue, but Miller says that to some degree, that reflected the falloff in the transaction business.

In addition to USDC, Coinbase has expanded into business areas such as staking, cryptocurrency custody, its base payment network, cryptocurrency wallet services, and developer tools to further diversify its revenue stream. However, Miller says that only USDC is currently a meaningful contributor to the firm’s revenue. “I’m still skeptical that Coinbase’s smaller businesses can drive the kind of growth necessary to reduce the firm’s reliance and trading income on a relevant timeline,” he says. “It takes quite a bit to move the needle for a firm of Coinbase’s size.”

Miller projects Coinbase’s revenue to increase at an average rate of 12.5% over the next five years, with adjusted operating income rising at a similar pace of 12.8% annually. He bases this outlook on a forecast for total cryptocurrency market capitalization to hit $5.25 trillion by the end of 2029.

How Should Investors Approach Coinbase?

The Coinbase investment thesis comes down to the long-term belief in “cryptocurrency and blockchain acting as disruptors to the existing financial systems,” Miller explains. “If stablecoins take market share from existing payment networks and financial institutions are disrupted by decentralized finance protocols built on blockchains then Coinbase will benefit as the dominant firm in this space. Coinbase has positioned itself as the primary on-ramp and service provider for crypto currency, the question is how valuable does that position ends up being and can they maintain it.”

However, Miller cautions about two major risks for owning Coinbase: the firm’s dependence on cryptocurrency prices and the potential for increased competition. He notes that Coinbase’s net revenue roughly doubled in the fourth quarter of 2024 and then dropped 35% over the next two quarters. And “with a more permissive regulatory environment now in place, we are beginning to see more aggressive competition from existing firms, which could endanger Coinbase’s market share and/or its premium pricing.”

Coinbase Stock Valuation

Trading at roughly $357 per share, Coinbase stock is priced 74% above Miller’s estimate of its fair value. This places the stock in 1-star territory, making it overvalued. Miller says investors should “avoid the name until there is a more attractive entry point,” nothing that Coinbase’s results are extremely volatile from quarter to quarter. “Investors would benefit from waiting for a better margin of safety to get involved in the name.”

The following are highlights of Miller’s current outlook for Coinbase and its stock. The full report and more of his coverage are available here.

Economic Moat

In our view, Coinbase does not have an economic moat despite being the leading cryptocurrency exchange in the United States. Coinbase has carved out a strong place in the cryptocurrency exchange industry by intentionally positioning itself as a reliable and regulation-compliant place to buy and sell cryptocurrency in an industry filled with risk, weak security practices, and spotty regulatory enforcement. This has allowed the company to successfully charge fees higher than many of its peers while building a large pool of liquidity on its platform.

The company’s reputational advantages have only grown in recent years, following the collapse of one of its largest rivals, FTX, due to financial fraud. While we do expect fee compression to occur in the long term, recent events will likely allow Coinbase to continue to charge a premium in the immediate future.

Find more of Miller’s analysis of Coinbase’s economic moat here.

Fair Value and Profit Drivers

Our fair value estimate for Coinbase is $205 per share, which translates to 23.6 times our 2025 earnings projection. USDC’s market capitalization increased rapidly in the final months of 2024 and so far in 2025. Coinbase’s stablecoin revenue comes from interest on the collateral behind USDC, meaning that rising market capitalization feeds directly into the firm’s top line.

Additionally, the portion of USDC held on Coinbase’s platform has risen over time, helping offset the impact of lower interest rates on its stablecoin revenue. The rest of the increase comes from higher trading revenue expectations as we adjust our model to reflect a continued rally in cryptocurrency prices.

Find more of Miller’s analysis of Coinbase’s fair value estimate here.

Risk and Uncertainty

We give Coinbase an Uncertainty Rating of Very High. Coinbase gets more than half its net revenue from trading fees at its exchange business. Fees are charged as a percentage of the underlying assets being traded, creating direct exposure to cryptocurrency prices. The cryptocurrency market itself is highly volatile and deeply cyclical. In 2022, Coinbase’s revenue fell more than 59% from the prior year as cryptocurrency prices collapsed.

Cryptocurrency is still a highly speculative market, and the number of active traders on Coinbase’s platform can vary sharply based on market performance. Currently, this exposure is acting to Coinbase’s advantage, but the durability of the market recovery is a major point of uncertainty. The company is also exposed to falling interest through its participation in USDC.

Find more of Miller’s analysis of Coinbase’s risk and uncertainty here.

COIN Bulls Say

• Coinbase has established itself as the leading US cryptocurrency exchange and established a strong reputation for security in an industry filled with risk for traders.
• Cryptocurrency prices increased sharply at the end of 2024, leading to much higher trading volume and revenue for Coinbase.
• There is a global market for cryptocurrency. Regulatory approval from international regulators will allow Coinbase to expand its operations and increase its footprint globally.

COIN Bears Say

• Cryptocurrency markets have historically been deeply cyclical, with long periods of low prices and depressed trading volume. This adds considerable volatility to Coinbase’s revenue flow.
• The regulatory landscape and long-term viability for cryptocurrency remains unclear, with regulators becoming more aggressive in the aftermath of the high-profile fraud and the failure of FTX.
• Coinbase’s stablecoin revenue is dependent on interest rates, adding another layer of cyclicality to the firm’s results.