JPMorgan: Coinbase Benefit The Most From Ethereum Merge

Investment banking firm JPMorgan states that the Ethereum merge will be beneficial for Coinbase, leading to a bigger revenue opportunity.

The Ethereum Merge is anticipated by the cryptocurrency industry, but many stakeholders want to get the most out of it. The much-anticipated update, according to Wall Street firm JP Morgan, might potentially be quite advantageous for cryptocurrency exchanges. On the other hand, retail traders might be hoping to profit from a potential increase in the price of ETH as soon as it occurs.

According to a StreetInsider report from August 17, stated in a note to clients that institutional and retail clients like Coinbase will likely benefit from the transition of Ethereum from proof-of-work to proof-of-stake. The merge will be highly beneficial for Coinbase as it can attain value from ether staking that powers the transition.

“We see the staking revenue opportunity bigger (proportionally) than the income opportunity given we expect Institutional staking clients will contribute meaningfully to ETH staking revenue, but much less so for Institutional customers. The vast majority of the economics remains with retail.”

The analyst said

Worthington stated that Coinbase holds a 15% market share in ETH assets. He also added that the majority of Coinbase’s market share is inclined toward institutions. Most of these institutions also hold bitcoin and ethereum.

The bank also predicts that Coinbase can bring in over $650 million in annual staking revenue post the merge, assuming ETH hovers at $2,000 with a yield of 5%.

The JP Morgan analyst claimed that apart from Coinbase, other exchanges including Binance, Gemini, and FTX would also profit from the Ethereum upgrade. 

The Ethereum Merge is anticipated for September 15. However, technical alterations to the schedule are possible. The upgrade will make it possible to switch from Proof of Work to Proof of Stake as the consensus mechanism. The new mechanism should result in less energy being used for Ethereum mining. Prices have recently increased as a result of the Merge’s impending arrival and preparations for it.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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