Investment bank Compass Point has reaffirmed its bearish stance on Coinbase, maintaining a “Sell” rating and a $140 price target for the crypto exchange’s shares. The analysts warn that an intensifying fee war in the perpetual futures market, combined with revenue cannibalization and the looming threat of overseas competitors, will limit Coinbase’s growth and pricing power despite recent regulatory wins.
The note, published Monday, acknowledges that Coinbase secured a CFTC green light to offer offshore crypto perpetual futures to U.S. users through its Deribit subsidiary—a venue it acquired for $2.9 billion last year. However, Compass Point argues this advantage is quickly eroding. The same day, the CFTC approved Kalshi to list Bitcoin perps, and the CME announced round-the-clock Bitcoin futures and options trading. Meanwhile, brokerages like Interactive Brokers have already integrated prediction markets, and exchanges Kraken and Robinhood are poised to roll out their own perpetual futures products soon.
“Competition and low switching costs limit COIN’s ability to exert pricing power relative to spot trading, particularly among more sophisticated users that are most likely to trade these products,” the analysts wrote. They see the flurry of new entrants fueling a fee compression race that will squeeze margins for all players.
Compounding the bearish outlook, the bank flagged signs of cannibalization. Coinbase’s first-quarter perps revenue reached $50 million, but that gain coincided with retail spot trading revenue dropping to its lowest level since Q3 2024, suggesting futures volume may be drawing away higher-margin spot activity rather than adding new demand.
The report also highlights a longer-term risk: the possibility that major offshore exchanges, particularly Binance, could secure U.S. regulatory access. Compass Point notes that the Trump family’s connection with Binance, via World Liberty Financial’s USD1 stablecoin, “could also improve the likelihood of U.S. access” following Binance’s $4.3 billion settlement in 2023. If Binance enters the U.S. market, its massive liquidity and user base would pose a severe challenge to Coinbase’s dominance.
Shares of Coinbase fell 2.6% midday to around $184, according to Yahoo Finance. The analysts concluded that “the U.S. regulatory expansion as a negative driver for COIN’s market share and pricing power longer-term,” expecting leverage restrictions to further limit domestic perps trading versus offshore markets.
