Zhao Haibei’s ChainCatcher commentary takes a measured look at Coinbase and frames the debate around a different question: not whether the company can trade higher in one to two years, but whether owning it is a better choice than holding other crypto-linked assets such as BTC.
The piece opens with a blunt assessment. Based on declining market share, a bloated management structure and weaker product strength, it is easy to conclude that Coinbase is not a particularly strong company. The recent divergence between Robinhood and Coinbase in share-price performance only reinforced that view. Still, the author argues that much of this is already reflected in Coinbase’s current valuation. In that framing, simply identifying a “good” or “bad” company does not automatically create excess return, because the act of paying for that quality in the market tends to erase the company-level edge.
The issue is opportunity cost, not whether Coinbase can rebound
The article says crypto remains in the bearish portion of its four-year cycle. From a one- to two-year perspective, Coinbase is likely to trade above current levels, in the author’s view, which makes the binary question of whether to buy the stock less useful. The more relevant issue is opportunity cost: how Coinbase stacks up against other crypto exposures, especially BTC.
Two starting points in the analysis
The author lays out two basic facts.
- After Coinbase reported second-quarter earnings, the two-sided risk tied to renewing its agreement with Circle was removed. If no revised terms are negotiated, the contract renews automatically for three years.
- Within Coinbase’s revenue mix, non-trading revenue can be split into stablecoins and other businesses. Those other businesses include blockchain staking, subscriptions, income from holding crypto and interest income. The article argues that this bucket is highly tied to the broader crypto cycle and should not be treated as truly non-cyclical revenue.
A valuation exercise built around USDC economics
The article lists Coinbase’s second-quarter stablecoin revenue at $292 million, including $28 million contributed by the company’s own USDC balances. That puts full USDC economic revenue for the quarter at roughly $320 million. Over the same period, transaction revenue was $599 million and total revenue reached $1.22 billion.
Average USDC market capitalization in the second quarter was about $77 billion, according to the piece. Of that, 26% sat within Coinbase products, while the daily average share on the Circle platform was 19.5%. Under the existing agreement, Coinbase captured about 50% of total USDC economics over the past year, the author estimates.
The article adds that Circle also has assets beyond plain stablecoin issuance revenue, including Arc, CPN and other long-dated options. At the same time, Coinbase has stronger bargaining power and channel positioning. Treating those factors as roughly offsetting each other on a 1:1 basis, the author estimates that about $15 billion of Coinbase’s $38.5 billion market capitalization corresponds to its stablecoin business, leaving around $23.5 billion attributed to non-USDC operations such as trading, staking, subscriptions and lending.
Using an annualized second-quarter run rate, the article values Coinbase’s stablecoin business at about 11.7x gross revenue, or about 18.7x after deducting roughly $119 million of USDC rewards. The non-USDC business comes out to roughly 6.5x revenue. On a trailing twelve-month basis, the article says the non-USDC segment is valued at around 5x price-to-sales.
That narrows the question to one point: whether 6.5x sales for the non-stablecoin business is attractive when compared with BTC. As a benchmark, the article proposes a simple alternative: buy Circle to gain stablecoin revenue exposure and buy BTC to capture broader crypto trading-related upside.
Why the “Coinbase never beat BTC” argument falls short
The piece cites a familiar argument first: Coinbase has not outperformed BTC over the years, so investors might as well just buy BTC.
The author says that logic has two weaknesses.
- Past underperformance does not prove future underperformance. In the article’s view, using historical price action alone to infer future returns is not meaningfully different from relying on chart-based technical analysis.
- Long-term underperformance does not mean there are no windows for excess return. Many companies have failed to beat BTC over long stretches, but that does not mean they offered no trading opportunities.
Eight periods when COIN beat BTC on a relative basis
Excluding the brief overvaluation period after Coinbase went public, the article identifies eight episodes in which COIN produced relatively sustained outperformance against BTC.
1) May 2022 to August 2022: +122%
On May 11, bankruptcy fears shook the market, and earnings disclosures deepened the panic. COIN fell about 21.6% relative to BTC that day. In June, the company cut 18% of staff to reduce fixed costs, and BlackRock chose Coinbase Prime. That combination eased bankruptcy concerns and drove what the article describes as a classic distressed-reversal trade.
2) December 2022 to February 2023: +77.1%
The FTX crisis pushed COIN into what the article calls a bankruptcy trade, with a bottom forming in late December. In January, Coinbase cut 950 jobs and reduced quarterly expenses by about 25%, helping COIN rise 11.4% relative to BTC in a single day. In February, the dismissal of a securities class action brought another 25.2% single-day relative gain as legal risk eased.
3) June 2023 to July 2023: +94.2%
On June 6, the U.S. Securities and Exchange Commission sued Coinbase, sending COIN down 16.9% relative to BTC that day. After that, spot ETF applicants including BlackRock selected Coinbase for custody and surveillance-sharing arrangements. Ripple’s court win in July then lifted COIN by 20.3% relative to BTC in a single day. The article treats this stretch as a regulatory repricing.
4) October 2023 to December 2023: +104.2%
As the probability of spot BTC ETF approval climbed quickly, Coinbase was seen as a direct beneficiary through custody, Prime and surveillance-sharing roles. Binance’s guilty plea and large settlement also strengthened Coinbase’s U.S.-listed and compliance premium. The article characterizes this period as a double boost from ETF expectations and a better competitive setup.
5) February 2024 to March 2024: +45.9%
After spot BTC ETFs were approved, the market initially worried that ETFs would siphon away Coinbase’s high-fee retail trading activity. In February, however, the company reported its first quarterly profit since 2021, with trading revenue recovering and costs declining. COIN then rose 8.3% relative to BTC the following day. In the article’s telling, the market narrative shifted from “ETFs replace exchanges” to “ETFs expand crypto asset scale, trading volume and institutional revenue.”
6) May 2024 to July 2024: +29.3%
FIT21 passed the House, spot ETH ETF progress continued, Stripe integrated Base and USDC, and the U.S. Marshals Service chose Coinbase Prime. All of that reinforced Coinbase’s positioning as a compliance-focused infrastructure platform. Even so, the article notes that COIN rose only 12.3% while BTC fell 13.2%, making this another regulation-driven stretch.
7) October 2024 to November 2024: +42.9%
After earnings on Oct. 31 came in below expectations, COIN fell 12.7% relative to BTC and marked a low. Following Donald Trump’s election win on Nov. 6, COIN jumped 31.1% while BTC rose about 9%, producing a 20.3% relative gain in a single day. The article says the market was pricing in a shift in SEC enforcement, progress in crypto legislation and looser limits on staking and token listings.
8) May 2025 to July 2025: +83.8%
After earnings in May, expectations for slower transaction revenue set a low point. Coinbase was then added to the S&P 500, and the stock rose 22.5% relative to BTC the day after the announcement. In June, the GENIUS Act passed the Senate and brought another 16.1% single-day relative gain. The article groups this period with the broader regulatory trade and says Circle’s post-listing surge also fed into the repricing.
One of the author’s more interesting observations is that crypto-linked equities are often described as leveraged BTC proxies, yet the backtest discussed in the article does not fully support that view. Coinbase generated relative outperformance against BTC several times even during bearish periods, and in bull phases it did not always win. More importantly, six of the eight outperformance episodes were mainly driven by regulatory developments.
Coinbase as a regulatory event trade rather than a long-duration hold
The article argues that over long periods the COIN/BTC ratio has broadly traded within a range. Given that market expectations for Clarity have faded, Coinbase near the bottom of that range can still serve as a vehicle for positioning around a regulatory event.
Structural shifts highlighted in the piece
The author cites a remark from a respected teacher: the essence of crypto is using a PVE narrative to attract retail participation into what is really PVP. The article then adds another layer. In the author’s view, even the PVE narrative is only a result. The more fundamental driver is capital overflow: money moves first, narrative follows.
On that logic, the wealth effect of 2021 triggered a huge fundraising wave across the crypto primary market from the first quarter of 2022 through the fourth quarter of 2022. That later showed up as a dense token issuance and exit cycle in 2024 and 2025, helping push Coinbase’s trading-related revenue to a peak across those two years.
The implication, the author says, is that if fundraising volumes in 2024 and 2025 are not enough to support another “Shitcoin Summer,” Coinbase’s core revenue base in the next bull cycle will be directly affected.
A second structural shift: non-stablecoin revenue diverged from BTC in 2025
The article says Coinbase’s non-stablecoin revenue showed a clear divergence from BTC price action from the first quarter through the third quarter of 2025.
The reason given is that altcoin activity, retail turnover and volatility were all too weak, which reduced Coinbase’s revenue elasticity versus BTC. The article says that if one looks instead at the total market capitalization of crypto assets outside the top ten — effectively the broader altcoin market — the correlation with Coinbase’s non-stablecoin revenue is much stronger.
Why, then, are larger tokens such as BTC and ETH less tightly linked to Coinbase’s revenue? The article points to regulatory clarity reducing the scarcity value of compliant trading channels. Coinbase once earned high-fee retail spot profits through its licenses, fiat on-ramps and reputation for security, but ETF structures and other institutional channels are now diverting part of that activity.
The piece also says Coinbase’s trading take rate has shown a clear downward trend as competitors such as Robinhood pull away.
From there, the author summarizes two structural problems for Coinbase’s trading-related revenue:
- After the end of “altcoin summer,” the addressable market in the next bull phase may be smaller.
- Greater competition is likely to push Coinbase’s share lower.
Based on that logic, the article concludes that Coinbase does not offer a compelling case as a long-term holding over a period of more than four years.
Three strategic takeaways in the article
1) Coinbase can still be a tool for expressing a differentiated view on Clarity and regulation
The article says Wall Street is largely pricing in that Clarity will not pass this year. If an investor has a different view on Clarity or related compliance developments, Coinbase at current levels — with relatively low price-to-sales on non-trading revenue — can serve as a comparatively safe instrument for that view. The author also says Coinbase is less sensitive than Circle to channel-sharing terms and interest rates, while both could show similar short-term upside elasticity if Clarity passes.
2) Versus a 1:1 Circle-plus-BTC mix, Coinbase is more of an altcoin-turnover trade
The article treats a 1:1 allocation to Circle and BTC as a comparison portfolio. Against that benchmark, Coinbase looks more like a way to go long altcoin turnover in a bull market. Over the long run, though, if the broader altcoin market continues to lag BTC, fundraising fails to keep up and Coinbase’s share keeps slipping as regulation becomes clearer, then Coinbase will probably underperform that 1:1 Circle-plus-BTC mix.
3) A range-bound COIN/BTC ratio is not the same as a reason to hold COIN
The final point is that even if the COIN/BTC ratio remains range-bound over time, matching BTC on a directional basis does not justify owning Coinbase. The article says COIN takes on higher volatility for each unit of return, leaving its long-term risk-reward profile weaker than BTC’s.