Sell Coinbase Before Derivatives Squeeze Crypto Giant, Says Compass Point
Compass Point kept a bearish $140 target on Coinbase, warning that tougher competition in derivatives could limit growth.
Intelligence analysis by GPT-5.4 Mini
Compass Point says Coinbase’s push into derivatives faces a crowded market and may not add much growth. The bank pointed to regulatory relief, first-quarter perpetual futures revenue of $50 million, and signs that new products could cannibalize existing business.
Coinbase is trying to make money by letting people make bigger bets on crypto prices. Compass Point thinks that plan may be harder than it looks because many other places already offer similar games.
It is like a pizza shop opening in a street full of pizza shops. Even if the new shop has a nice sign, it still has to convince people to switch from the places they already use.
The bank says Coinbase did earn some money from this business, but not enough to make it a big winner yet. It worries that some of the new business may just be people moving around inside Coinbase instead of bringing in lots of new customers.
Analysis
Compass Point stays bearish on Coinbase
Compass Point analysts reiterated a bearish $140 price target on Coinbase, arguing that the company faces heavy competition in the derivatives market. The note says Coinbase may have regulatory room to offer offshore perpetual futures through its Deribit subsidiary, but that advantage does not remove the competitive pressure.
Competition is the main concern
The analysts pointed to Kalshi and the possibility of Binance as rivals that could make it harder for Coinbase to win meaningful share in perpetual futures. They said customers now have a growing number of ways to trade perpetual futures, which makes Coinbase’s path to standout revenue growth harder.
Revenue is there, but the bank sees limits
Coinbase did bring in $50 million in first-quarter revenue from perpetual futures, according to the article. Even so, Compass Point flagged signs of cannibalization, suggesting some of that activity may simply be shifting trading from one Coinbase product to another rather than creating entirely new demand.
The broader backdrop in the note is also unfavorable: market conditions are described as depressed, and the analysts expect Coinbase’s leverage-based crypto trading efforts to produce limited revenue growth if competition stays intense. The story frames derivatives as a real business line for Coinbase, but one that may be less powerful than bulls hope if rivals keep expanding and traders keep spreading activity across more venues.
Key points
- Compass Point reiterated a bearish $140 price target for Coinbase.
- The analysts said Coinbase faces fierce competition in derivatives.
- Coinbase gained regulatory relief to offer offshore perpetual futures through Deribit.
- The article says Coinbase made $50 million in first-quarter perpetual futures revenue.
- Compass Point warned that some of that activity may be cannibalizing other Coinbase revenue.
If Coinbase can use its regulatory progress and Deribit ownership to build a strong derivatives offering, it could still turn perpetual futures into a meaningful revenue line. The article also shows that the business is already generating revenue, with $50 million in first-quarter perpetual futures revenue.
If Kalshi, Binance, and other venues keep expanding, Coinbase may struggle to win enough trading volume to justify the push. Compass Point also sees signs that the new product may cannibalize existing activity, which would limit net growth.
