Coinbase (COIN), one of the leading crypto exchanges in the world, has expanded into the crypto derivative market with a product tied to the flagship cryptocurrency, Bitcoin (USD-BTC). It is launching Bitcoin futures contracts on June 27, in a move that marks a diversification of its services beyond spot trading. COIN stock jumped 6.5% to $62.71 on June 24, though it is still down 75% year-to-date.
Why Coinbase’s Bitcoin Futures Offering Matters
Coinbase is offering what it calls “nano” Bitcoin futures contracts priced at one-hundredth of the flagship cryptocurrency, which is about $210 per contract with Bitcoin at about $21,000. The lower upfront cost is expected to make the product more accessible to retail investors.
Coinbase will initially offer its Bitcoin futures contracts through third-party brokers. In the future, it hopes to offer the product directly to its clients once it obtains the necessary license. Valued at $3 trillion, the crypto derivatives market presents a huge revenue opportunity for Coinbase.
Wall Street’s Take
The Street is cautiously optimistic about Coinbase stock with a Moderate Buy consensus rating, based on 14 Buys, five Holds, and two Sells. The average Coinbase price target of $131.79 implies 110.16% upside potential to current levels.
Insider Trading
TipRanks’ Insider Trading Activity tool shows that Insider Confidence Signal is currently Positive on Coinbase, with corporate insiders buying $76.8 million shares in the last quarter.
Key Takeaway for Investors
Although there are platforms that already offer some type of mini Bitcoin futures contract, Coinbase’s offering appears better priced to appeal to retail investors. The crypto derivative product also opens an avenue for Coinbase to diversify outside spot trading.
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