Coinbase's Base Jump

Coinbase stock (COIN) has rallied 28% off its Tuesday local lows, marching upwards to hit a new cycle high this morning! What bullish catalysts have pumped COIN?

Onchain activity on Coinbase’s Base L2 has exploded since Ethereum’s Dencun upgrade went live last week, slashing the cost for rollups to post data to Ethereum and allowing transaction fees for users to fall (initially).

While the demand for local compute on Base has sharply increased in recent days, leaving its average gas fees for end users relatively unchanged from pre-Dencun levels, surging revenues combined with monumental cuts to its cost structure allowed Base to net a monstrous sum of 478.18 ETH in pure profit yesterday.

Now, hear me out. If Base could make this heightened level of onchain activity the new normal, it would represent a $600M increase to Coinbase’s annualized revenues at current ETH prices.

Further exciting COIN bulls was news that Coinbase Derivatives LLC, the exchange’s US-licensed futures trading platform, had filed with the Commodities Futures Trading Commission (CFTC) to list regulated futures for Dogecoin, Litecoin, and Bitcoin Cash.

These products could begin trading as soon as April 1, assuming there are no objections from the CFTC, and would provide US users access to leverage through futures contracts on these assets alongside existing products for BTC and ETH. As the leverage provided by futures contracts allows users to trade greater volumes, Coinbase stands to earn more from trading fees, assuming these products begin trading and receive adoption from the exchange’s users.

Compounding on COIN’s wins was an announcement that they had been selected as a key infrastructure provider for BlackRock’s new BUIDL fund, their first onchain fund!

Tokenization promises to disrupt traditional financial markets by improving the liquidity, accessibility, transparency, and composability of assets while providing a host of time and cost savings for issuers.

BlackRock’s deployment of BUIDL suggests that the world’s largest asset manager is keenly tuned into the benefits of tokenization and may look to deploy additional capital onchain in the future (assuming their first fund proves a success), which would allow Coinbase to earn more revenue for the services it provides.